tv Capitol Hill Hearings CSPAN November 17, 2011 8:00pm-1:00am EST
unrealistic in almost any scenario. lest my words fall on deaf ears, let's start at beginning. for my colleagues who do not hear me the first time, this may be a little redundant but i'd like to address the history of the balanced budget amendment. it's been a long road. in fact, mr. speaker, if i weren't so appalled by the nation of this effort, i'd be apt to congratulate my friends across the aisle for never letting go of their dream. i can absolutely relate. as i have a few constitutional amendments myself. i guess the disney phrase, quote, anything can happen when you believe really did stick with them. they believed since 1936, when in reaction to f.d.r.'s new deal republican congressman knutzen of minnesota introduced the first version of the amendment in 1936. like many constitutional amendments this resolution did not receive a hearing or a vote. during president dwight eisenhower's first term, the judiciary committee of a barely
democratic senate held its first hearing on this amendment. it again did not receive a vote. . ed bfpbletbnltanltspobbedubs shifted their focus to the states. 38 legislatures called for constitutional convention to propose this amendment to the states. the election of president reagan and republican senate in 1980 renewed hopes and passed by congress. while the senate did adopt the amendment in 1982, it failed to garner the necessary 2/3 majority in the house. this failure energized conservative groups such as the national taxpayers union and the national tax limitation committee to refocus on state action. the missouri legislature supported the b.b.a. bringing the total to 32, two short of the 34 needed for a convention.
however, a growing concern about the scope of a constitutional convention led some states to withdraw refocusing to congressional action. 1990 to 1994, congress would make three additional attempts, all failed to garner the necessary 2/3 majority. the b.b.a. made a comeback when it was included in contract with america. the newly empowered republican majority gave conservatives the first congressional win in a decade. disappointment awaited in the senate where two separate votes fell short of its adoption. this failure, along with the balanced budget and the balanced budget surplus zapped any remaining support for the b.b.a. there was renewed support in 2000 as it was included in the party's platform. bush tax cuts, wars in afghanistan and iraq, the
passage of medicare part d, all unpaid for led to massive deficit spending by republicans that led them to swap the balanced budget amendment back under the rug. in fact, i meant to say sweep it. by 2004, the republican party created such debt and so embarrassed that they left any mention of a balanced budget amendment out of their platform. again in recent years, with the advent of the tea party and return of extreme fiscal conservativism in the republican party. there are 12 balanced budget amendments in the house and three in the senate. mr. speaker, we have a troubling national debt and deficit. but the balanced budget amendment is not the solution. i have already addressed for you the three arguments that the proponents of the b.b.a. use to draw in misinformed worshippers compared to every day families.
in the same way my colleagues across the aisle have pointed to another entity that is required to balance its books, the states. mr. speaker, i, again, can't continue without pointing out a serious dilemma in comparing the government of individual states to the federal government. perhaps if our founding fathers had seen fit to stick with the articles of confederation this argument might be more legitimate, but at the end of the day we find ourselves under the guidance of the constitution of the united states, which i'm able to stand before you as an elected official conveying the views of my constituents. the requirements and expectations of our federal government to the debate and continuous dismay of some of my colleagues are now and forever different from those of the states. that the federal government is bound to protect via military force and provide for the collective security of our nation, maintain the national
currency, determine the scope of the federal courts, promote and encourage our nation's scientific and technological and regulate trade between the states that make up this great union. at the end of the day, the states rely on the federal government, much like the citizens of the united states. at last, mr. speaker, since this logic doesn't carry with my conservative friends, i would like to point out a few technical problems with this impressively mature the states do it argument. on its face, i'm willing to say this may be true. nearly every state in the union has some form of a balanced budget amendment. unfortunately, this has not kept them out of debt. furthermore, their amendments have restricted their ability to care for their citizens in times of austerity or emergency. quite frankly, i don't think that's an option for the federal
government. in the face of such an emergency, i think every constituent we represent would agree. according to a forbes analysis of the global debt crisis in january, 2010, every state in the country is carrying some form of debt. these debts range from $17 in nebraska to $4 thourk 490 in connecticut. in 2012, approximately 44 states will face revenue shortfalls. and many are ready to declare their state bankrupt because this proposed amendment would place the federal government in an unequally unacceptable present dickment. in rhode island, there are positions unfilled. as a desperate last resort, chief justice has begun to dispose of cases on backlog and
the judge is tossing them out. florida is in the same position. this past week i spoke to the federal courts in the northern district of illinois, federal workers being laid off and long investments in the system being told that the federal courts in the northern district of illinois can no longer sustain themselves. i told them i would bring their message back to this congress, that this congress can spend billions of dollars to fight a war in afghanistan and iraq and spend on scientific exploration and put a man on the moon, why can't we find a man in this congress to put a woman or a man on their own two feet. my colleagues across the aisle are so concerned about handing our children and grandchildren any amount of national debt that they fail to realize we are setting future generations for failure. states are cutting too many services that the american -- that make the american work
force strong and competitive. should the federal government do the same? our legacy will be in america that is undereducated, ill-equiped to compete. what happens to america when both state and federal governments can't make the investment? when our state and national capitals are hiding behind balanced budget amendments? what happens to america. the ones that will suffer won't be the conservatives pushing for this amendment but will be our poor, our children, our veterans, our elderly, the disabled. the america that doesn't have an interest incorporate tax rates, subsidies for big oil companies or whether the federal government or insurance company underwrites their flood insurance. every day america will suffer. the balanced budget amendment is the wrong key to the doors of
prosperity and fits inside the keyhole. it seems like a perfect match but doesn't open the door. we twist it, we shake it, we fiddle with it, but wind up stripping the lock, doing more harm than good. and at the end of the day, we move no further, made no progress from where we started. b.b.a. is not going to solve america's deficit crisis. according to the center of budget and policy priorities, a federal balanced budget amendment would damage our economy. heighten the risk of default and jeopardize the full faith and credit of the united states. favor wealthy americans over middle and low-income americans making it difficult to raise revenues and easier to cut programs and weaken the principle of majority rule making balancing the budget more difficult and no one to my
satisfaction none on the republican or democratic side has explained to me what qualifies a federal judge to intervene in this process and make a judgment to cut programs. have they studied programs and studied the need of constituents around the country and been to ap lash yeah, the ghettos and trailer parks of our nation? what qualifies a federal judge to determine when a person's federal assistance shouldn't be given to them. nothing. and this congress votes tomorrow to change the constitution of the united states as if their opinion should matter in this particular process. mr. speaker, i want to go into a little more detail because i need my colleagues to understand the level of damage they'll cause if they continue to sugar this bill and force it down the
throats of the american people. first, a balanced budget amendment would damage the economy and make recessions more frequent. congress would be forced to adopt a rigid fiscal policy requiring the budget to be balanced or in surplus every year regardless of the current economic situation. a sluggish economy with less revenue creates a deficit as we have seen from recent events, which requires economic stimulation in order to reverse economic growth. the american recovery and investment act invested in infrastructure and provided 95% of working americans with an immediate tax cut, extended unemployed insurance and those who hurt by the economic downturn through no fault of their own. if congress were forced to function under a b.b.a., deficit reduction would be mandated even
more so during slow or stalled economic growth which is the opposite of what is needed in this situation. my republican colleagues have taken to finger pointing about the stimulus package. i see a commercial laughing about the embarrassing and painful ways it failed to push our economy out of resgs. i find it funny no one has talked about it what would have happened without it. here in the halls of congress we are expected to legislate but we have to take our advice from the experts, the economists and told us we should have done more. the b.b.a., risks making the nation's recessions more common and more catastrophic for seniors, disabled, veterans. congress is stripped of any power to adequately respond. secondly, a b.b.a. would jeopardize the full faith and credit of the united states.
we have already been down this road and know how that turn is. we teatered on the brink of default, pointing fingers and we couldn't pass a respectable debt increase and only need add simple majority. a balanced budget amendment would bar the government from borrowing funds unless a 3/5 vote in both houses of congress permitted it. we wouldn't have been able to raise a debt limit in the last debate. a budget crisis in which a default becomes a threat which is more likely and the limits on the fluid it of the debt ceiling. after the chaos we experienced a few months ago after the downgrade of our nation's credit rating and i would think, mr. speaker that would try to avoid an identical future situation. a b.b.a. would exacerbate the
same issues we saw in august. third, mr. speaker, a b.b.a. would lead to reductions in needed investments for the future. since the 1930's, our nation has consistently made public investments that improve long-term productivity and grolet in education, infrastructure and development. they increased private sector investment leading to budget surpluses and thriving economy. a balanced budget amendment which requires a balanced budget each and every year would limit the government's ability to hinder future growth for years, conservatives have abused the debt and the deficit as a springboard on which to argue for smaller government and cuts to program that serve as social safety nets to the american families. although we must consider it, the larger issue is the nature of the debt and what it created. if you invest $50,000 in a
business, a house or an education, you can expect future return on your investment. if you invest, the same $50,000 in a gambling debt, what is the future return? both expenditures result in a $50,000 debt, but only one results in a return that can transform that debt into a long-term asset or gain. . even small expenditures on social programs lay a foundation for great wealth in the long-term. if the nation chose to invest over a five-year period $1.5 trillion in building roads and bridges and airports and railroads, mass transits, schools, housing, health care, we would create a debt. but the increased ability of companies to interact and ship
their goods over well-paved and planned roads, the new businesses that would sprout around freshly built or newly expanded airports, the high wages of a student who is well educated and able to attend college resulting in more tax revenue, the improved productivity of employees at their healthiest would eventually result in greater returns for our country. the extension of bush era tax cuts for corporations and the rich brought but about some short-term stimulus for consumer spending but stim so the -- similar to the reagan tax cuts which resulted in regular deficits and debt, the long temple damage outweighs the immediate -- long-term damage outweighs the immediate effect. reagan's tax cuts for the rich came at the ex pence of long-term balanced economic growth. the reagan administration neglected and cut back our nation's investment in infrastructure, education, health care, housing, job training, transportation, energy conservation and more. the inclination of most
conservatives in both parties, i'm not picking on republicans today, in both parties, is to consult the debt by cutting programs for the most vulnerable amongst us. our poor. our children. our elderly. our disabled and minorities. this approach, however, has proven false too many times. a balanced budget amendment will take us back to this archaic and infective system permanently. and, fourth, mr. speaker, a balanced budget amendment favors wealthy americans over middle and low income americans by making it harder to raise revenue and easier to cut programs. under current law legislation can pass by a majority of those present and voting by a recorded vote. the b.b.a. requires that legislation raising taxes must be approved on a roll call vote by a majority of the full membership of both houses. before i even finish this point, mr. speaker, i want to make this point. look at the supercommittee.
look at what they're wrestling with. we don't even have a balanced budget amendment and look who they're targeting. look at the emphasis of their cuts. so instead of a balanced budget amendment in the constitution we already see the congress is ineffective in what we've already passed. imagine if it were a constitutional requirement, the point is so simple, mr. speaker, the b.b.a. would make it harder to cut the deficit by curbing special interest tax breaks of the oil and gas industries and making it easier to reduce programs such as medicare, medicaid, social security, veterans benefits, education, environmental programs and assistance to poor children. wealthy individuals and corporations receive most of their government benefits in the form of tax entitlements while low income and middle income americans receive most of their government benefits through programs. as evidenced by the cuts that both parties agreed upon recently, it's far easier to cut social welfare programs
than to cut spending on our military or to increase taxes. as long as spending is a political issue, cuts to those programs that assist those with the smallest voice in washington will always happen first. raising taxes, the only option to address a budget deficit aside from cutting programs, is already a burdensome issue. the additional requirements of a b.b.a. further complicate the process of raising taxes. this means the richest americans will likely keep the benefits they receive from our governments via tax cuts. meanwhile the poor, they lose their programs that provide them with housing, with food, with health care and the means to survive. this will further reinforce the growing gap between the rich, the rest of our society, middle class working poor and the destitute alike. the b.b.a. insists that the
total government expenditures in any year, including those for social security benefits, not exceed total revenues collected in that same year. including revenues from social security payroll taxes. thus the benefits of the baby boomers would have to be financed in full by the taxes of those working and paying into the system then. this undercuts the central reform of 1983. and finally, mr. speaker, the b.b.a. weakens the principle of majority rule and makes balancing the budget much more difficult. most balanced budget amendments require that less than -- unless 3/5 of the members of congress agree to raise the debt ceiling, the budget must be balanced at all times. they also require that legislation raising taxes must be approved on a roll call vote by a majority of the membership. mr. speaker, in no way is this inexhaustive list. i know that my time is up but this is my second attempt to bring to my conservative friends to their senses. the only party served by a balanced budget amendment are
corporate interests and the wealthy, they seem to be serving instead of every day -- everyday working americans. my answer is no, mr. speaker, to the balanced budget amendment tomorrow. my answer is yes, if my colleagues agree, there is no way that they can pass the balanced budget amendment unless we ourselves agree that we must invest, build and grow this economy and work our way out of this problem as americans. mr. speaker, i yield back the balance of my time. the speaker pro tempore: the gentleman's time has expired. under the speaker's announced policy of january 5, 2011, the gentlewoman from new york, mrs. berkle, is recognized for 60 minutes as the designee of the majority leader. ms. buerkle: thank you, mr. speaker. here in washington we are divided on many issues but whether we are republican or democrat, members of congress recognize the essential role that our hospitals play in our communities. hospitals provide care for the
sick, their clinics provide essential care to many. they are engaged in important medical research and teaching hospitals are educating doctors and nurses to provide care for future generations. and in many districts across the country, including mine, new york's 25th congressional district, our hospitals are a major -- are major employers. perhaps the largest single employer a congressional district may have. mr. speaker, the health care sector constitutes nearly 18% of the united states' economy. and is one of the more stable portions of our economy. american hospitals employ more than 5.4 million people. and as hospitals and hospital employees buy goods and services from other businesses, they create additional jobs. their economic impact, mr. speaker, is felt throughout the community. hospitals are a vital part of our local and our national
economy. in new york state and particularly in my home district, hospitals are the largest single employer. i want to call your attention to this chart, mr. speaker, with data provided by the hospital association of new york. which shows the importance hospitals have on my district's local economy. five hospitals in my district employ over 18,000 people. together payroll and purchases in my district alone amount to over $2.4 billion. they generate over $100 million in state and local income sales taxes. this is in my district alone, mr. speaker. the economic impact of our hospitals. looking at new york state as whole, combined, and i hope some of my new york colleagues will join me here tonight, hospitals contribute nearly $108 billion to our state and
our local economies. mr. speaker, it is no exaggeration to say hospitals are a mainsay it of our new york -- mainstay of our new york state economy. and when our hospitals are hurting, mr. speaker, the effect extends to the entire community. our hospitals are under assault and not only will it affect our local and state economy, but it will also affect access to health care. some of the most basic services that our hospitals provide to our communities. i now yield to the gentleman from georgia, dr. gingrey. mr. gingrey: mr. speaker, i thank the gentlelady from new york for yielding to me. as i thank most of my colleagues -- as i think most of my colleagues know, congresswoman buerkle is a member of the house g.o.p. doctors caucus, 21 of us, all health care providers, some doctors, some nurses, some
dentists, some psychologists. we've got a really good diverse group that has -- have -- i would hate to say, mr. speaker, the total number of years of clinical experience that we all have in the aggregate, but it's several hundred. and i have thoroughly enjoyed having congresswoman buerkle, a registered nurse who has worked for years in hospitals in the new york area, and as she's pointing out, the four hospitals in her district are probably one if not the major employer, one of the major employers and so important to her community. the 25th district of new york. that is so true, mr. speaker, across so many of our districts. i happen to be an ob-gyn physician, having practiced in
my congressional district, the 11th of jonk georgia, for some 26 -- the 11th of georgia, for some 26 years. and our hospital system thrrk the main town in -- system there, the main town, just as in congresswoman buerkle's district, the hospital system is one of the main drivers of the economy. that and the school system, the public school system. but the hospital systems are employers and we sometimes forget that. i think as a physician a lot of times i may be guilty of concentrating on issues that mainly affect my colleagues in the medical profession, the practitioners, the m.d.'s, but as congresswoman buerkle is pointing out and i know she's got a number of posters and slides for us to look at tonight, the devastating affects that the so-called
affordable care act, the unaffordable care act, indeed, has on our hospitals like hers, the four hospitals in the 25th of new york, the well star health system and i think it's six different -- and i think its six different facilities in the metropolitan atlanta area, it is devastating. so i really appreciate the opportunity to join with her tonight, along with some of my other colleagues in the house g.o.p. doctors caucus to make sure -- caucus, to make sure that people understand that it's not just the doctors and the health providers outside of the hospitals that are suffering because of this unaffordable care act, but our hospital systems all across the nation. i thank the gentlelady for yielding to me and i plan to be with her during this next hour and i yield back at this moment. ms. buerkle: i thank the gentleman from georgia for being here this evening.
mr. speaker, as my colleague mentioned, the president's patient protection and affordable care act, which became law in march of 2010, included some welcome provisions. such as allowing people to stay on their parents' insurance until the age of 26 and prohibiting insurers from denying coverage based on pre-existing conditions. these positive provisions which proponents quickly point to when facing criticism are far outweighed by the negative consequences that the affordable care act has on our providers in the health care system. these measures could have been accomplished in a much simpler manner. and i say to you, mr. speaker, so many roads are pavegged with good intentions -- paved with good intentions but the unintended consequences are devastating to our hospitals. as a health care professional my opposition to the affordable care act has never been solely based on philosophical grounds
but strategic and tactical ones. most americans, myself included, my colleagues here in congress, recognize that health care needs to be reformed, that health care continues. the cost continues to rise and we need to figure this out. we just disagree what health care reform should look like. if i thought that the federal government could be the necessary agent of change, that would be one thing. but, mr. speaker, i don't believe the government can change health care. mr. speaker, the affordable care act effects how our hospitals and providers -- and it's not a republican or a democratic issue but an american one. access to health care affects every american. mr. speaker, i'd like to yield now to the gentleman from michigan. mr. benishek: thank you for the
yielding to me. mr. speaker, i've spent 28 years as a physician practicing rural medicine. even serving on the board of my local hospital. i'm well aware of the great financial difficulty most rural hospitals and clinics experience each year. today i was pleased that the state of michigan celebrated rural health day. on behalf of the thousands of michiganans -- michigan ands that are call small towns and farming communities home, my state's governor chose to recognize the hospitals and community-based centers that provide for the diverse and unique health care needs of these areas. . i would like to join the state of michigan of raising awareness of the importance these providers bring to the communities that i represent. while we recognize the importance of rural health today, i would be remiss if i did not mention one of the great rural health facilities in my district. many of my colleagues may have visited during their summer
vacation or seen mackinaw island. the rural health clinic is the single largest employer in the community supporting not only the local township but in addition the 900,000-plus seasonal visitors that depend upon the hospital for services each year. i recently received a letter from mr. rodney nelson the c.e.o. of mackinac straits and is concerned about the cuts and the ability to keep the doors to the hospital open. it is one of the 25 hospitals open in my district that are considered critical access or sole-community hospitals. of these, 56% are operating in the red. unlike urban areas, my
constituents often don't have any other options. in the case of another hospital, the next closest clinic is 50 miles away. caring for patients in rural facilities is far more economic than providing urban care. rural patients cost less to treat in eight of the 9 c.m.s. regions. as my colleagues and i discuss possible ways to trim the budget that without rural hospitals many of my constituents would not have access to medical care. a 2% reduction in medicare spending is statemented to cost 389 jobs in my district. this number will raise. at that point 76% of the hospitals would be operating in the red. and total economic impact is expected to be $68 million with 1,900 jobs affected.
mr. speaker, i don't even tell anyone that people in northern michigan can't afford to lose another 1,900 jobs. mr. speaker, if we force these cuts or lose these jobs, we will lose access to people's sole source to health care and forcing rural patients to travel longer distances to seek more expensive care and this costs everyone more money. i urge my colleagues to exercise caution when considering reductions to medicare programs especially those specific to physicians, critical access and sole community hospitals. i yield back my time. ms. buerkle: i thank the gentleman from michigan. mr. speaker, we have touched upon it and i want to continue having this conversation about the effect that the affordable care act is going to have on our hospitals and our medicare
population. now, mr. speaker, you may have heard over and over again from our colleagues from the other side of the aisle demagogging our budget proposal that came out in april. they say we want to kill medicare and social security and don't care about our seniors. tonight, i stand here, mr. speaker and i tell you and i want to tell the american people that the affordable care act, in fact, cuts medicare spending by $500 billion, $500 billion. those are actual cuts, mr. speaker, that are now in the affordable care act or what is known as the health care law. one of the most negative effects is reduction in hospital care payments and the code offsetting reductions. i have a chart and as i go through my notes, i want it to be clear that you can see 2010
and what happens to medicare reimbursement down until 2018. hospitals can't sustain these cuts. and the five hospitals in my district have come to me and said this affordable care act and many of these hospitals were big proponents because they know we need to reform. we need to make some changes so they were in support of the law. what they didn't realize is that this law is going to cut their medicare reimbursements which so many of them depend on them and main stay by 28.6%. i have had hospitals say to me we cannot sustain these cuts. we will go bankrupt, because, you see, mr. speaker, it's not only this medicare, the reduction in these rates but a series of other cuts, which we'll get into as the gentleman proceeds. i would yield to the gentleman
from georgia. mr. gingrey: i thank the gentlelady for yielding and i want to take the opportunity, mr. speaker. i have an article, actually, in "the atlanta journal-constitution"," atlanta's main newspaper, this was several years ago, referencing one of our best hospitals, piedmont, cutting 5% of work force and this is what misty williams of the atlanta journal constitution says in this piece. faced with a rising number of uninsured patients and unknown impact of the new health care law, that would be the so-called affordable care act. piedmont health care announced thursday evening plans to cut 464 jobs as part of an effort to
save an estimated $68 million, totaling 5% of its work force, the cuts include 171 positions that were vacant or altered because of scheduling changes. layoffs are coming from across the board, including piedmont's four hospitals, physician groups, heart institute and corporate division, supposewoman nina day said. this is heart wrenching and not easy stuff when you are talking about people. the move is in part a reaction to hurdles and hurdles that congresswoman burkle and congresswoman been she can were talking about. the hurdles that hospitals are facing are a growing number of uninsured patients, a new state hospital bed tax, anticipated cuts to medicare reimbursements
and medicaid expansion in 2014. the article goes on -- talking more and more about how devastating this would be and in conclusion without reading the entire article, i'll finish up and read the article, the last paragraph, while hospitals will get more insured patients as a result of the medicaid expansion in 2014, it's a big tradeoff with medicare cuts. state officials have estimated that georgia, my state, could add more than 600,000 enroll yees to its medicaid program as a result of this expansion. it's a challenge and time just trying to navigate all these changes. again, it's just so important, mr. speaker, we are having the
opportunity tonight on behalf of our leadership to tell our colleagues on both sides of the aisle, congresswoman buerkle said it's not a republican or democrat issue but a people issue and a community issue and it's devastating and sad news we are bringing to our colleagues but we need to do that and the american people need to understand what's coming. the worst has not yet hit. and i yield back. ms. buerkle: i have spent most of my professional career in the health care industry. i have represented a hospital for a number of years so i know up close and personal how these issues have affected and will affect our hospitals and providers. and despite the best intentions of this health care law, whether we disagreed with it or agreed
witness, despite the best intentions of this health care law are the unintended consequences and our health care providers will not be able to proceed or perform the services that our communities need and expect and come to expect and certainly wasn't the intent of the health care law, but ladies and gentlemen, and mr. speaker, that is exactly what is happening. i would like to yield and recognize the gentlewoman from north carolina. mrs. ellmers: thank you for holding this special order and thank you for being here. we are here because we are health professionals. we know the real world of health care and we know the real world solutions. it's the reason i'm here in
washington now. that and the fact that i'm concerned about where the future of the country is going for our children. many times in our health care practice as a nurse and my husband's surgery practice, as small business owners, over time we have always looked at these issues, whether we are talking about medicare, whether we are talking about the possibility of have real, good concrete tort reform. if we could put these in place, health care could become a much more solid foundation moving forward. we know we have the best health care in the world, but knowing, being in the industry, having that small business, understanding where medicare and medicaid reimbursements were going, which were down, you have to ask yourself, how can this continue, how will we be able to provide health care into the
future? well, we know that the health care bill was passed in the 111th congress and now we are seeing the effects of it. and one of the effects, as you had pointed out, are to our hospitals. you know, it's important that we are able to articulate this to the american people, connecting the dots. when we talk about the importance of why obamacare is devastating to physicians, it is because it affects their ability to be reimbursed for their services. when medicare will be cut under obamacare, it was cut by $500 billion. seniors are saying we are worried you are going to cut our benefits. their benefits will not be cut by any of us in washington, however because the dollars have been taken out in a significant
amount, medicare will have to say, i don't know what we'll cover. what are we going to cover? as we know again in the president's health care bill, the 15-person panel has been put in place. this panel will decide what medicare will and will not pay for. that will be direct payments to hospitals, not just physicians, but hospitals based on the services that they're providing. and if they provide that a service cannot be paid for, there are penalties that can be assessed. there are solutions to this issue. and i pointed out that one would be significant tort reform. why is that important? sometimes i'm afraid that we don't explain well enough to the american people why something like malpractice reform would help this situation.
well, we know that in our nation's hospitals, if you go into the emergency room, you are going to receive care, whether you can pay for it out of pocket or not, whether you have an insurance card or not, whether you are on medicare or medicaid, it doesn't matter, you are going to receive the care. the problem is someone has to pay for those services because services are rendered. you go into the emergency room and many tests are ordered. physicians order more tests because -- out of pure fear for missing something. you can't go into an emergency room and get the good care you need to get if you cannot identify the problem. so, as we know, physicians at hospitals, physicians at doctors' offices tend to cover all their bases, rather than simply relying on the medical
education that they received, the ability to that, with the ability of their practice. here wer we talk about health care costs every day and the escalating cost of it. a good contributor to that is another piece of the president's health care bill, which basically puts a tax on all medical devices. well, think about the cost for any hospital, any provider, what are we doing in hospitals? we do surgery, we provide for health care. these are medical devices and instruments that have made our lives better and help us to live longer and yet now, they will be tax. this will be a tax that will be assessed and someone will have to pay for it. if the effort is truly to decrease the cost of health care, how can we continue by increasing the cost?
it doesn't make sense. it doesn't add up. . so the importance for us is to connect the dots for the american people. to show that if we're able to pull back on obamacare, that we're able to repeal it as we have already voted on here in the house, then we can make the significant changes. there's one more point that i'd like to touch on and there again it has to do with the ability to pay for services. there was just a consulting firm, mercer consulting company just did a study which shows that 9% of employers with 500 or more workers say they are likely to cancel health benefits in 2014 after state-run health insurance exchanges begin, offering coverage under the health care law. there again, once again it will become the government paying for it which is paid for by the
american taxpayer dollars. we simply cannot continue on this path with health care or any other issue. it has to come with free market solutions and we have those solutions and we are ready to put those in -- put those in place. i just again want to reassure our seniors who are receiving medicare now or in the near future that we are doing everything we can to rescue medicare from the president's health care bill. and put those necessary pieces in place so that we can continue those services into the future, that they have paid for their entire lives. thank you, again, to my colleague from new york, for holding this special order. ms. buerkle: i thank the gentlelady from north carolina for being here this evening. mr. speaker, i would just like to continue on a little bit here because of my concern and i know my colleagues have such concerns about the health and
the well-being of their hospitals. as i mentioned earlier, they're the largest employer in my district, we refer to it, we have a large university there and some colleges, but we also have five hospitals in my district. so our reliance for our local economy, for our state economy is just so very important. i want to talk a little bit more about what this health care law is going to do to medicare and going to do to our hospitals. there's $112 billion in reduced market past updates to hospitals. there's a $36 billion reduction to medicare and medicaid disproportionate share hospital payments. now, mr. speaker, disproportionate share may sound a little bit confusing or you might not know what that is. i'm going to explain it. in a district such as miners we have hospitals that have missions. and i'm sure across the country many hospitals have missions. they want to make sure that the intjent population, folks who
can't afford insurance, who are self-paid or are maybe on medicaid, that they have access to quality services. so the government says to these hospitals, we understand that medicaid reimbursements or self-pay patients will not cover your services. so what we're going to do is we're going to try to make you whole with this disproportionate share. mr. speaker, the health care law eliminates the digs proportionate share for hospitals. and so hospitals that have a high intjent population or -- high indigent population or high number of self-pay patients or those who are on medicaid, they're not going to get that disproportionate share. the hospital in my district came down here, it is a large teaching institution, they made a special trip down here to tell me that provision of the health care law will bankrupt them. that they probably will receive somewhere around $8 to million a year -- $80 million a year to make them whole because of
their mission. and isn't that what we want? we want to make sure -- wasn't that the original intent of the health care law? to make sure that there was accessible care for all americans? but here again we reached the unintended consequences and the effect that this law is going to have on our hospitals. there is a $7.1 billion reduction for readmissions and we'll talk about that in a little bit. hospitals in many of the ones in my district and i know throughout this country, they're heavily dependent on medicare and medicaid dollars and with that narrow margin medicare and medicaid doesn't even cover their costs. and so there's such a small margin for them to operate that there's really little capacity for improvements. realistically hospitals, especially teaching hospitals, and hospitals that are treating the underserved cannot bridge that gap and they won't be able to bridge that gap because of this new health care law.
hospitals must be able to invest in their infrastructure, having such a narrow margin and/or no margin operating in the red, they're not going to be able to do that. they're not going to be able to invest in infrastructure, systems improvements, new techniques to reduce hospital-acquired infections, new models of delivering health care and electronic health records. and i want to talk about electronic health records because they were mandated in the health care law. the affordable health care act mandates that hospitals must move to electronic medical records. now, from a patient's safety standpoint, that's a good thing. but getting hospitals up to speed and getting them ready for business has a very high i.t. cost for our hospitals. so, again, you've got this health care law mandating electronic records, medical records, and you've got these drastic cuts to our hospitals in their medicaid and medicare reimbursements.
would the gentleman from georgia -- would you like to -- ding goer mr. gingrey: mr. speaker, i thank the gentlewoman from for yielding -- the gentlewoman for yielding once again. just a few minutes ago one of our colleagues spoke also about this problem with hospitals, representative ellmers from north carolina, who knows of what she speaks. she works in an office with her husband, a general surgeon. they see patients every day in the office, but they also have a largely based hospital practice because it's surgery. you just don't do that in the office. but she had listed some of the things in obamacare, in this so-called affordable care act, patient protection and affordable care act of 2010 when it was passed a year and a
half ago. we all realize that this was a new entitlement program, mr. speaker. and the american people need to understand that it's not about strengthening, saving medicare for our seniors. that entitlement program is struggling mightily. and as representative buerkle mentioned, to take $500 -plus-billion out that have program to pay for a whole new entitlement program, obamacare, for in many cases a young -- the young an healthy, and also to put -- the young and healthy, and also to put some of the burden of paying for that new entitlement program on the medicaid program, the program, safety net program for the poor, it only weakens that program. so you have literally gut
medicaid for the poor and the disabled and medicare for our senior citizens, when both programs need strengthening and saving, not gutting, you know, it was this whole idea of having medicare for all, really, our national health care. there are all kind of ufeism ins to describe this. especially not the least of which is the name of it. the affordable care act. and as i said earlier, mr. speaker, and i know my colleague from new york would agree with this, it is the unaffordable care act. and both she and representative ellmers from north carolina said, look, we know on both sides of the aisle that health care in this country is too expensive. and we need to go about changes that will lower the cost and
not hurt the quality and we can do that. we have -- president obama keeps denying that there are any ideas and certainly didn't listen to the physicians in this body or the health care providers or physicians and the nurses that said, look, let us come over and sit down and talk with you or any of you folks in the executive office of the presidency and let us explain because we have, and i said it earlier, several hundred years of clinical experience, we do have some ideas and we really believe we want to be part of the solution and not part of the problem. but my colleague who is leading the hour and doing such a great job of it, i know she will agree that i haven't been call, i haven't been invited over -- i will ask my colleague and yield back to her and ask the same question and i know what the answer will be. but, again, the important thing for our colleagues, mr.
speaker, to understand is that the creation of this new program, this new entitlement program, so that everybody can get health care, where they want to buy health insurance or not, is so detrimental to medicare and medicaid that i fear for the future of those programs. i really, really do. and that's what it's all about here tonight. to take an opportunity to explain so people really understand the ultimate consequences of this. and i'll yield back the balance of my time to my colleague. ms. buerkle: i thank the gentleman from georgia. mr. speaker, i want to just emphasize again with regards to this health care law and the fact that this law and, mr. speaker, this is a law this isn't a budget proposal, this is a law, guts medicare by $500 billion and it should be of
concern, mr. speaker, to our seniors because this law in fact in 2014 will begin to gut medicare and i again would look at this chart and the medicare reimbursements. there will be no hospitals that will be able to provide health care. if you look at what the trend is for medicare reimbursements to our hospitals, they cannot continue to exist based on what is set forth in the affordable care act. i spoke with the c.e.o. of one of our local hospitals in syracuse and he spoke with -- actually i should say he spoke with one of my staff, my health care staff, and he indicated to us today that the hospital in the district is facing a projected loss of $18 million in reimbursement reductions. that number goes to access to
care. we can have the most comprehensive health care law in the books but if we don't have hospitals who are able to provide that care, then we don't have physicians who are able to provide that care, we will have an access to health care problems. mr. speaker, earlier i talked about hospital readmission penalties and this is another concern that hospitals have to deal with and, you know, tonight we've talked a lot about what the affordable care act will do to hospitals, the effect it will have on our hospitals, the drastic cuts in medicare and medicaid reimbursements, the disprorningsath share being eliminated. -- disproportionate share being eliminated. but our hospitals are under assault from all sides. that's part of the difficulty. maybe they could somehow figure out how to deal with these cuts in the affordable care act but taken in its totality, our hospitals are having a very difficult time. in fact, as i mentioned earlier, many are concerned that they will be unable to
sustain and unable to continue on with their services, given the whole assaults that are coming from all directions. one of the things -- and this actually is part of the affordable care act. it establishes a punitive policy for our hospitals, when they readmit a patient. and i'll explain that, mr. speaker. under the health care law, the affordable care act, we call it the affordable care act, we call it obamacare, we call it many things, but under this new law that is taking effect gradually, under this provision hospitals' readmission rates, now, this has to do with again their medicare reimbursements, compared to their expected reimbust -- readmission rates, if even more than one readmission occurs, and that readmission means that you discharge a patient, the hospital sends a patient home and then for some reason they have to come back, if that
happens with one of three diagnoses within the medicare scheme, the hospital will be penalized for all of the medicare reimbursements, not just that one case where there was a readmission, but all of the medicare reimbursement cases. you can imagine the magnitude and how that will affect medicare reimbursements. the other part of this provision in the health care law is that it doesn't -- it really doesn't discern between what's avodble and what's not avoidable readmission. so sometimes a hospital may discharge a patient and it was premature or something wasn't done and the patient needs to come back. and certainly that should be considered and we should figure out what went wrong, because readmissions are expensive and so medicare doesn't want to pay for them and i understand that. however some readmissions are
unavoidable, and a hospital shouldn't be penalized for an unavoidable readmission, yet the affordable care act does exactly that. secretary of the department of h h.s., health and human services, has the authority to expand what were three diagnoses, has the authority to expand that list with regard to readmissions. hospitals nationwide, mr. speaker, are projected to face more than $7 billion in medicare reductions over 10 years because of this policy. $7 billion. to our hospitals. we began this discussion tonight, mr. speaker, talking about the importance, the importance to our local economies, the importance of -- the importance of the employment numbers what hospitals pay into our community with their purchases and with their employees, the taxes they give back to the
community, and now we're talking about cutting them again because of this policy. the issue of hospital readmission is complex. i hope i did a good enough job tonight of explaining it. while health care providers agree there's room -- there's always room for improvement across the continuum of care. readmissions occur for many reasons and punitive action for reimburse -- readmissions is not only -- is harmful to or hospitals, our patients and our communities. mr. speaker if we work hard to make sure our seniors get the medicare benefits from the system they have paid into, and i want to emphasize that over and over again in the course of this hour, our seniors have paid into medicare, into the health care system, all of their life. and now, as they reach the medicare eligibility age, they deserve to get medicare coverage that they expect, that they deserve, and that they've
paid into. but this health care law this $500 billion cut to medicare, is going to change that for our seniors. it's not the budget proposal in april that's going to -- that was a budget proposal and you've heard my friends an colleagues across the aisle demagogue our budget proposal in april, saying we want to cut benefits to seniors, medicare, and social security. the fact is, this health care law, this health care law, passed into law in 2009, will devastate medicare an our seniors, mr. speaker, should be very, very concerned about this affordable care act. not only will it affect our hospitals as we spent so much time talking about tonight, but it will also affect the care and the access to care for our seniors.
hospitals, mr. speaker, already operate on such thin margins and we talked about this earlier that for many providers, especially specialized programs, treating patients struggling with substance abuse or helping the developmentally disabled, they'll be reduced or they'll end those programs. hospitals have to -- they cannot operate on such a thin margin and then run the risk of these -- of all of these devastating medicare and medicaid reimbursements. mr. speaker, i also want to talk tonight a little bit about graduate medical education. as i mentioned earlier, mr. speaker, i was an attorney in syracuse, new york, and i represented a hospital that was a large teaching hospital. so i know how much they rely on what's called graduate medical education. we often refer to it as g.m.e., is the the act ro vim for it, the initials.
i'm going to explain what g.m.e. is because it's so important to our hospitals, even hospitals that don't have a medical school attached to them will talk about the -- because students train in these facilities. graduate medical education is the training medical school graduates receive as a fellow, intern, resident. medicare is the largest contributor to the g.m.e. why do i bring this up? i bring this up because we talked earlier about the many assaults on health care providers, the many assaults hospitals are concerned about. this is not, per se, in the health care law. so i want to make that clear. but many -- when it comes to cutting, when it comes to finding and helping this terrible, -- terrible national debt we have that is now $15 trillion, often we look to
medicare and one of the areas in medicare, it's what we, you know, the low-hanging fruit, whether it's a hospital or physician, that seems to be the easiest place to go to, rather than really looking at our health care system, making it a free market, allowing the market to compete, allowing, getting the government out of health care, and letting the free market, letting us folks buy insurance across state lines, rather than letting the free market in it, we have the government involved. so medicare is the largest contributor to this g.m.e. g.m.e. payments, as i mentioned, have been targeted, they've become a target for recommended budget savings. in 2010, the president's simpson-bowles deficit commission recommended limiting hospitals' g.m.e. payments to 120% of the national average salary paid to residents in
2010. reducing another reimbursement hospitals get, the indirect medical education, by 60% from -- from 5.5% to 2.2%. mr. speaker, these two changes, medicare reimbursement to the g.m.e., medicare reimbursement to the i.m.e., would reduce medicare, medical education payments by an estimates $60 billion through 2020. $60 billion. mr. speaker, these aren't just numbers. these proposed cuts would endanger the ability of teaching hospitals to train physicians. we must face the facts that cuts to graduate education would result in fewer practicing physicians and ultimately reduce access to care. which is getting back to why there was an affordable care act. i talked about this road paved with good intentions. now what we are seeing is that
our hospitals, our health care providers and the training of physicians are both going to be significantly and severely impacted to the point where access to health care becomes a problem. so seniors, not just seniors, but all americans, will have to begin to deal with the fact that primary care physicians, there won't be as many of them, there will be fewer doctors being trained, and for a number of reasons, the g.m.e.'s an the i.m.e.'s going to hospitals, if there's any reimbursement reductions to those, but also the fact that if a physician goes through those years of training and goes through four yores of college, fur years of medical school, an internship, three years of residency, then if he's a fellow because he wants to specialize, all those years -- years and then they go into practice and you see what
the afford b care kt, you see what these assaults are doing on our medicare and medicaid reimbursements to physicians as well as our hospitals. hospitals that are primarily teaching hospitals face an additional challenge that could threaten the stability of their institutions. hospitals have residents in improved granl watt medical education receive an additional payment for medicare discharge do reflect the higher cost of care because they are a teaching hospital, their cost of care is higher. the regulations regarding the calculation of this additional payment, and i talked about this earlier, is the indirect medical education. this is all very complicated but what i want to say and what i want to make clear, mr. speaker is that if these cuts go through, it has been estimated it will cost g.m.e. and i.m.e. reimbursements from medicare, $60 billion. this could mean a loss of 2,600
jobs and $653 million in state and local revenue and mr. speaker, $10. billion loss to the u.s. economy. at current graduation an training rate the association of american medical colleges projects that the nation could face a shortage of as many as 150,000 doctors in the next 15 years. 150,000 doctors. we talked about this, and i think whether you're on one side of the aisle or the other, whether you adepree with the health care law, we all agree we want to have in a country as rich and as generous as ours, we want to have access to health care for all americans. but if we don't have physicians to provide that care, and this estimate is 150,000 doctors in the next 15 year a shortage of that many, it will discourage this access to health care and
will result in longer waiting times for patients. mr. speaker, in closing, i want to just emphasize a few points this evening, and it is -- it's always an honor to be here on the house floor, it's always an honor to talk to the speaker, and tonight it's been an honor to address health care, as a health care professional, i spent years as a nurse, and then, as an attorney representing a hospital. i know that people within the health care profession are dedicated. they have a passion to provide the american people, to provide any people, with quality health care. to make sure and ensure that they have quality health care. and you know, mr. speaker, the united states of america has the best health care in the world. so it is so imperative that we preserve this health care system. my colleague from north
carolina mentioned earlier that we voted to repeal the health care law. the affordable care act. because it's not in the best interests of goof health care. tonight you heard, mr. speaker, from several of my colleagues who are health care professionals, who dead kayed their whole lives to providing medical services to the people in their communities. they care about quality health care. they care about people an they care that the united states of america has a good health care system. but we don't believe that good health care, access to health care, reasonable costs within health care, are going to result from the affordable care act. the affordable care act, i want to emphasize this one more time, mr. speaker, cuts medicare to our seniors by $500 billion. to our seniors, that will be a devastating blow to the services and access to services that you will have. but beyond that, it affects how our hospitals can provide care,
how our hospitals will be paid, how our doctors and young doctors will be trained for future generations. the affordable care act may have been the most well-intentioned law but it is devastating for health care and health care delivery services in the united states of america. mr. speaker, hospitals serve us and our communities. the crafting of the affordable care act was carried out with the good intentions of many. as i said, i don't want to inkate or imply that people didn't have good intentions with this affordable care act but they aprofed it from the wrong direction. they put the government in the middle of a physician an the patient and that can never work. good intentions are not enough to excuse legislation which has a terrible and far-reaching, albeit unintended, consequence for all sectors of our society, especially our patients, our
doctors, and our hospitals. mr. speaker, i yield back. the speaker pro tempore: under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from texas, mr. gohmert, for 30 minutes. mr. gohmert: thank you, mr. speaker. one thing we got plenty of around here is paper, unfortunately. we got bills, we got laws that we should have taken up that we
haven't. and when we talk about the health care bill, people know we talk about obamacare, whatever the formal name is. cutting $500 billion out of medicare, already. that's a done deal, rammed through when speaker pelosi was in charge at the behest of our president, obama, $500 billion in cuts. . our seniors deserve better than that kind of treatment, and i don't think we had any republicans vote for that, but it was driven through against the will of the american people and against the will of the republicans. democrats had the votes, so they
did it, $500 billion cuts in medicare. so a.a.r.p. has seniors sending petitions, i'm a member, don't you dare cut anything from medicare, we try to make sure our seniors know that it was medicare that stood by the president as he cut $500 billion and glad they are waking up to just what the president and a.a.r.p. -- what they did to seniors. but if you look at how much money we are spending on medicare, not to even mention medicaid, look at how much we are spending on medicare and you look at the number of households we have around 17.5 million
medicare households -- this is from 2009, you divide that into the amount of money that we're spending -- federal government spending on medicare, not even medicaid, just medicare, we're spending right at $30,000 for every household for somebody on medicare, $30,000? now, for someone who has bad heart problems or some kind of chronic disease, that's not so bad when you consider with all kinds of treatments and medicines they're getting. that's if you look at the bills that are sent out. if you look at the amount of actual money that are paid for
those procedures, actually paid or reimbursed by insurance companies or the government, it's not near that much for most households, even most households on medicare. that's why i was shocked not too distant past to find out that in one situation that i'm aware of personally, when there was $10,000 between the -- $10,000 in bills between the hospital, the physicians, the ambulance the testing, the people reading the tests, all that stuff, two days of hospitalization, $10,000, turns out that the insurance company, the health insurance company resolved all
$10,000 in bills for about $800. well, if we knew exactly how much was being paid to pay for hose exorbitant health care bills, we could finally reintroduce something known as free market principles. now the doctors i've talked to, the health care providers i have talked to, they wouldn't mind that. there are insurance policies or contracts that health care providers have with some of the health insurance companies that say they cannot charge -- that's what i'm told, they can't charge somebody paying cash little as a health insurance company providing the contract that's out by paying. we can't have competition in
health care until people know how much they're paying for their medicine, for their hospital stay. you got to know what they're paying. great thing growing up in a small town of east texas. i loved the town, mount pleasant, texas, after four years in the army, my wife settled in tyler and it's the only home my kids knew growing up. been so good to me, my wife and family, we have all been blessed there, but in the smaller town i grew up in, everybody knew the doctors and time we go to a different doctor and lot of times it was because, you find out they uped the price and go to another doctor because they didn't charge as much. that's called free market
competition. we don't have that anymore in health care. we've got to get back to it. if we have to bring the costs down, we have to get back toit. people have to know what it costs to go to the doctor. people need to know that their medicine that they see a cost of $900, that the insurance company when they reimburse for that $900 prescription don't pay but a fraction of that. if somebody can't afford insurance, why they should have to pay $900 for a prescription drug that a health insurance company wouldn't pay a fraction of that much? we have to get back to having some competition and the cost of things. so there's one way, really the only way i see we get off this track to total socialized health
care, that obamacare puts us well on down the road toward arriving and that would be through greater use of health savings accounts. we're told by some that if kids in their 20's and 30's start putting money in health savings account and it grows and grows because they don't use much at that young age, from the time they are eligible for medicare, not only would they not want to use medicare, they wouldn't need it. they would have so much money built in the health savings accounts that they didn't use every year. and i agree with some of the people i consulted with over the last several years what would be a better plan. if you could have people putting money every month in a health savings account, building that
account, then not allowed to be drawn out for something like buying a boat or anything like that, but it has to be for health care. can't be for anything else. once it's dedicated in a health savings account and should be allowed to be put in there pre-tax, then it has to be for health care. sure, we ought to allow people to donate that to some charity that keeps health savings accounts for the less fortunate, ought to be allowed to gift it or give it to children, to family. it would help them grow that big northwest egg of a health savings account and debit card coated with nothing but health care costs and you use that
health care savings account until you reach the high deductible that the health insurance policy has and then the health insurance kicks in. that would help make health insurance so much cheaper for most folks. that's what a lot of us have gone to and i have myself. a lot cheaper. every household with someone on medicare is costing nearly $30,000. it's just staggering. and that's why instead of continuing to move toward rationed care, putting our seniors on lists where they can't get treated very quickly. they have to wait, because let's face it, the way of socialized medicine is rationed care.
and president obama not only must have known that that was the truth, but he put a man in the position to oversee obamacare who made clear in prior statements that it's not a matter of if we go to rationed care but a matter of when and he's the guy who is in charge of obamacare because obviously, this president and the democratic majority in the last congress intended, expected that seniors would be getting rationed care. how much better to say, you know what, seniors? you've got a choice. how about that. we have so many people on the democratic side of the aisle talk about it should be people's right to choose. they should have choice, choice, choice. how about in health care? how about giving seniors a
chance to choose. you want medicare? you want to be denied some medicines? you want to have to keep buying that supplemental coverage from a.a.r.p.? your choice. on the on the other hand, if you want to do something different -- and i'm flexible on the amount but it appeared $3,500 was an effective amount for achieving that high deductible and lower costs for an insurance policy, then we will buy you, the federal government will buy you a private health insurance policy that covers everything over $3,000 500 and give you cash money and health savings account and debit card and you use as you see fit, you choose what medicine, you choose what doctor and when you exhaust, if
you exhaust the 3,500 bucks, then the insurance kicks in. you don't have to buy supplemental coverage and i know that would cost a.a.r.p. hundreds of millions of dollars and i know they care deeply about retired folks and i get that. but, boy, if retired folks wouldn't have to pay anything for supplemental insurance, seems like it would be a good thing, but give them a choice. let seniors choose what you want. you want control of your own health care and the money to pay the deductible if you get that high and insurance policy to cover everything beyond that. if you go beyond that, you control things or do you want to let the government keep telling you what you can and can't get in the way of treatment.
the country is better off when the federal government is the referee, not the player, because government's always going to be a referee, but when it's the player and the referee, that's when it is so grossly unfair. anybody should be able to figure that. that would be so much better for seniors. give them the choice. you know what? this president, speaker pelosi, leader reid, they feel they know better for seniors. they felt it would be better if they didn't allow seniors to have a choice. too bad, seniors, we are going to cut $500 billion from the amount of money that we are expending on medicare and you are about to find out what real rationed care once obamacare
kicks in. why not give them a choice? why not force doctors and health care providers for the first time in decades to start posting what the cost of health care is. how much is your hospital in a single room, or double room with two patients, how about showing people that, letting them decide which is cheaper because as long as the government is paying all those costs, people don't care. that's the way of the world. that's why in the soviet union in 1973 when i asked some farmers in the middle of the morning who were sitting in the shade visiting, instead of being out in the field working and i tried to do it as nicely as possible, spoke a little russian back then, when is it you work
out in the field? one of them said, i make the same number of rubles whether i'm in the shade here or out there. so i'm here. that's socialism. when the federal government socializes medicine, as obamacare is driving us toward, one giant step, we're virtually there. . it changes everything. people don't care how much things cost because they're not paying them. people don't try to go to a less expensive doctor or hospital because they don't care. somebody else is paying it. and then when they see the bill that, gee, this cost $10,000, they say, i'm glad i'm not paying that. but they don't care, because they're not paying it.
they don't know there may have been $200 paid for that hospital bed, rather than $10,000. people deserve to know what health care costs. and as i say, the health care providers, the doctors i talk to, they wouldn't mind being able to do that. they would love it if patients could come in and give them a health savings account debit card and they don't have to have extra people that are chasing down the new codes and all this information about what the government pays, what the insurance company will or won't pay. we get back to a doctor-patient relationship. wouldn't that be wonderful. as i told health insurance companies before here in washington, d.c., we need to get the health insurance companies back in the health insurance business and out of the health management business. if the health insurance companies are determined to
stay in the health management business where they manage our health care, they're eventually going to have everybody mad at them, they're going to be out of business and there won't be any health insurance companies anymore other than the socialist federal government of the united states. i don't want to get there. we're almost there with obamacare. that's why this body, the majority republicans having taken over this year, voted to repeal obamacare. but real health insurance, when it's real insurance, people pay a small monthly, quarterly, semiannually, annually fee in order to ensure against some unforeseen disease or accident down the road. unforeseen because if they could foresee it, they'd know how much they needed to save to
take care of that event that's coming, or the disease. but you pay an insurance company for something you don't know, might happen, maybe it will, maybe it won't. and the thing is, if we went to the place where we allowed those on medicare to choose, stay with medicare if that's what you want, keep buying that supplemental insurance, or we'll give you the cash and a health savings account and a debit card, we'll buy the insurance to cover everything over the cash we put in your account for the year, and we'll do that every year. and when i was drafting the bill in a prior congress, newt gingrich was helpful, he sent experts to come visit about ideas, they said, we ought to have an incentive in the bill
so seniors would have an incentive not to spend all the money, the $3,500 that's put in their h.s.a. every year. so we put in a provision that if someone on medicare didn't use up all the $3,500 in their health savings account, then they got a percentage of that cash money that they could take, it was not -- no income tax to be paid on it, just cash money in their pocket at the end of the year, to encourage them not to waste money from the health savings account buying stuff they didn't need because they were going to get a percentage of that if they didn't spend it at the enof the year. give them incentives. that's what market forces are about. incentives. now, if we were to do something like that, then certainly, there are people who are chronically ill, we will always have people who are chronically
ill. and those are the people we should help. they can't help themselves. that's what a caring society does. but when there are people who are able to help themselves, then those are the folks that ought to be able to grow a health savings account over the years so that they don't need any government help by the time they get to a point where they're eligible for medicare. they need it, they'll get it. but that would finally get us on track to get out of this massive amount of debt that we're in. that's the way to go. but in the meantime, not only is that not something that's occurring, we're not able to innovate new things that will become law. we're innovating new things like the alternative to
medicare, the choice we could give seniors, but we know that as the president's called us, and it really only applies to the other end of the hall, we've got a do-nothing senate. not the republicans, they keep clamoring, trying to push, trying to get the democratic leadership in the senate to do something to help the economy, truly do something to help health care. but they're not interested in doing that. we've got a super committee, as it's been dubbed, that we really shouldn't have set up, and i have nothing but sympathy for my republican friends that have been put on that committee. because they were put into a position where unbeknownst to our republican leadership that negotiated the deal that brought this committee about,
the democrats really don't have anything to push them to reach an agreement. that appears to be why the democrats seem to be interested in what pat due mi had floated out as a -- toomey had floated out as a framework, they appeared to be interested in it but after consulting with democratic leadership, they realized, uh-oh, we're told not to work a deal because if we don't work a deal, their draconian cuts to our national security, which we don't mind, we've been wanting to do that for years, and the other cuts will be to medicare, and apparently, because of the lack of interest by the democrats in seeing that there's a deal done , it would appear they don't
mind having the cuts to medicare an that's what was puzzling me last week. why is it that democrats on the super committee, after they hear how far backwards republicans were willing to go on the super committee, how is it that they end up walking away from basically what they wanted? and so i struggle to try to figure out what it was that would keep them from being desperate to cut a deal with republicans. surely they don't want those cuts to medicare. then i realize, democrats are 100%, totally responsible for the $500 billion in cuts to medicare that are contained within obamacare. they also know that millions of dollars of republican campaign money will be spent next year, probably talking about the $500 billion in cuts the democrats
solely, on their own, pushed through in obamacare. and unless there is at least a couple hundred billion in cuts to medicare, there's at least that amount would result in a fail wrur to pass some kind of bill from the super committee, unless there's something like that, the $500 billion that the democrats cut medicare last year is all anybody is going to be talking about in the next election. but if the super committee fails, the house and senate don't pass what they've said, then we've already seen the rhetoric begin. republicans, they say, are wanting to cut health care, wanting to cut medicare. so now, we see how it's playing out. some, apparently, on the democratic side, not all, but some apparently the leadership
of the democratic party, apparently the president, want to see failure so they can campaign against republicans saying, they didn't want agreement anyway. look at the cuts to medicare they forced. i don't see any other explanation for the cavalier attitude of the democratic leadership and -- in not pushing so hard to get an agreement to avoid the massive cuts to medicare. even with the massive cuts, it won't be as big a cut as obamacare was to medicare. but it will be enough, apparently, for them to campaign and try to demonize the republicans. apparently tomorrow we're going to vote on a balanced budget amendment.
it'll either be house joint resolution one, house joint resolution two, house joint resolution one has a cap on spending, we can't go above a percentage of gross domestic product, requires a super majority in order to raise taxes, that's house joint resolution one. that's what passed out of committee after a long and exhausting day of the bait and amendments. but we're bringing to the floor house joint resolution two. it just has -- says you've got to balance the budget. there are those who say, well, that would mean our decisions start being made by the courts. 49 out of 50 states, as i understand it, have a balanced budget requirement in the their constitutions. their courts don't make those decisions.
i don't see why it would be otherwise. we've got the power to restrict jurisdiction for everybody but the supreme court. we can do that. if that's what we chose to do. we're in a mess. because we're not doing the things we promised we would when we ran and got elected the majority, the very things democrats lost the majority in this house because they didn't fulfill. time to get serious about our promises. everybody is aware of francis scott key writing our wonderful national anthem. before my time runs out, i want to finish with something else francis scott key said, february 22, 1812. he said this. quote, the patriot feels himself in the service of god. he acknowledges him in all his
ways, has the prom of almighty, and will find his word in his greatest darkness, quote, a lantern to his feet and a lamp unto his path, unquote. francis scott key continues, he says, he will therefore seek to establish for his country in the eyes of the world such a character as shall make her not unworthy of the name a christian nation. we've got a lot to do if we're going to live up to our commitments, our oath. a balanced budget amendment with a spending cap is what we needed to do. that's what we passed out of committee in regular order. that's what i would vote for tomorrow since that's not coming. i don't want to push through a balanced budget amendment that requires ever upward spiraling
taxation because as we've shown this year, without a balanced budget amendment, congress doesn't have the will to cut spending. not a majority of the house an senate both. it's time to live up to the commitments we've made. and what we owe our creator, our maker. if we do that, we can have another 200 years of greatness as a nation an if we don't, as abraham lincoln said, this nation will die by suicide. i want it to live and flourish. i want us to keep our commitments. with that, mr. speaker, i yield back. the speaker pro tempore: the gentleman from texas. mr. gohmert: at this time, i move that we do now adjourn.
about loan guarantees to solyndra. in three hours, house debate on the balanced budget to the constitution. >> for those who say, my friends, to those who say that we are rushing the issue of civil rights, i say to them, we are 172 years late. [applause] for those who say -- for those who say this and civil rights program is an infringement on state rights, i say this. the time has come in a america for the democratic party to get out of the shadows of states' rights and to walk forthrightly into the bright sunshine of human rights. >> hubert humphrey spoke those words nearly 20 years before championed his civil rights bill
into law. the longtime senator was vice- president under lyndon johnson and later ran for president in 1968 and lost. we will look at his influence on american politics this week on "the contenders." live at friday at 8:00 p.m. eastern. condoleezza rice, george mcgovern, headlined this weekend as the miami book fair international trade join in with your calls, e-mails, and it tweet on cspan 2. also this weekend on afterwards, pat buchanan and ralph nader on the end of america. >> nationalism, tribalism, religious fundamentalism is far more powerful than ideology. we are not immune in this country from these forces. when the melting pot has been
thrown out and you are preaching multiculturalism, what holds us together? >> mr. buchanan in's book is "sucicide of a superpower." find the complete schedule on booktv.org. >> stephen cu denied there was pressure from the white house to block a bond guarantee to solyndra. a company that went bankrupt this year. in testimony, secretary chu said it is on likely much of the loan will be uncovered. -- recovered. this portion of the hearing is three hours.
>> good morning, everybody. we will open the subcommittee hearing on oversight and investigation on the solyndra failure and views from secretary chu. we welcome this hearing to further examine the department of energy's review and approval for the $535 million loan and guarantee to solyndra as well as its repeated efforts to keep this company atop, his green jobs pedestal. what investigation continues, it is readily apparent that senior officials in the administration put politics before the storage of taxpayers' dollars. my colleagues, we have methodically investigating the circumstances surrounding solyndra's failure for nine months and followed the facts of
her step of the way. our goal is to determine why the department of energy tie themselves so closely to solyndra and why they were so desperate to prop up this company. why did doe make these bad decisions? what can we do to prevent it was of taxpayer dollars in the future? as our investigation has unfolded, many more questions have emerged about the loan guaranteed it to solydnra. the seventh -- the extent of the white house involvement. so today we are focused on the loss of $535 million of taxpayer money. when dot was reviewing the solyndra application at the end of the bush administration, too many questions remain unresolved. leading them to end discussions with a cylinder and harmonic
became clear. president obama visited them in 2010 and accorded that the true engine of economic growth will always be companies like solyndra. it is important to understand how secretary to visit to these concerns and the authority to make sure this company so closely connected with the fate of his green jobs agenda ultimately succeeded. in the fall of 2010 just one year after the long closed, solyndra had flat land and started to default on loans -- the terms of the lawn. they showed waivers from requirements. it desperately tried to figure out ways to keep it afloat. in early december after several lengthy negotiation sessions with solyndra and despite clear lessons in the statute barring them from doing so, do made an
offer that would tax pairs with the first recovered and liquidation. we have since uncovered serious disagreements within the administration about not only the legality of this arrangement, but whether it was a good deal for anyone involved but the hedge fund investors. as i said before, if solyndra really is a litmus test, we have a bunch bigger problem on our hands. two of the first three deals under the acceleration policy have now blown up and it filed for bankruptcy. gao has a series concerns about doe ability to monitor the lines. the white house has initiated a review of the portfolio. nobody has admitted any fault. and the president and a democratic colleagues a truck could off and say, hey, sometimes things do not work
out. the administration is refusing to allow doe witnesses to testify under oath. they refuse to make some important witness to be available to us at all. nobody in the administration takes responsibility. that concludes my opening statement. >> before i start my opening statement, mr. chairman, which witnesses has the white house refused to produce testimony under oath. please give me if their names. >> i will be glad to give you a list. >> if i could have of this before the conclusion of this. >> just between you and me -- i would like to know please, thank you. waxman have been urging the majority to have been over to them -- discuss the issues concerning the solyndra loan guarantee and the advocacy of
loan guarantees for solar energy. this investigation, we all believe, is of critical importance to the american public. both so we can get to the bottom of what happened to half of a million dollars to taxpayer money and also to ensure the knowledge regain for the situation can inform our efforts to drive american clean energy innovation for the long term. unfortunately, instead of conducting a serious inquiry into the facts relating to solyndra and the lessons we can learn to discuss, the majority today as evidence from my colleagues opening statement has focused on the firing partisan and broadside at the obama administration. two weeks ago, the committee committed an unnecessary and unprecedented step in that battle with the white house. despite good efforts on behalf of the warehouse to negotiate an accommodation to produce information regarding key committee concerns. and then last week when the
white house did produce the documents, the majority selectively released to the press 3 e-mails that presented a distorted account of mr. keiser's activities while withholding documents as well as statements by mr. keiser that contradicted the interpretation. but me be clear, not of us on my side of the aisle are here to defend or to apologize for the actions of anyone in the administration or in the white house in particular. in my 15 years on this committee, we have had a strong committee -- tradition of bipartisan investigations. it has been my hope that we could have continued that tradition in order to fulfill our oversight duties to the american people. unfortunately, this has not been the case. the point of this inquiry should
not be for partisan victories or to smear people who support one political party over the other. what we should be trying to do is to figure out what happened with the solyndra loan guarantee so we can bring accountability to the american people and improve our ability to advance the united states as a leader in the clean energy market. i hope the secretaries of parents can provide relevant information on several key issues that we are investigating. first, we need to examine whether appropriate due diligence occurred before doe september 2009 approval of the loan guarantee. the staff recently approved current doe officials who were involved with the decisions including steve who was appointed by president bush and served as chief financial officer from july 2007 through
july 2011 under the obama administration. he told the committee staff that he believed the doe awarded a loan to solyndra was based on merit and secretary chu did not ask anyone to cut corners. others who were interviewed made similar statements. i am wondering -- i am looking forward to hearing the secretary's statement. second, we need to look at whether doe exercise good judgment by restructuring the loan guarantee and subordinating some of the interest in 2011 when cylinder a -- solyndra was a virgin on default. some have alleged that it violates the energy policy act. to help this committee ss the issue, we ask before doe general counsel to review the subordination. the former doe reviewed the
analysis as reasonable. i conclude from the statue the loan guarantee regulations and doe's prior interpretations of 1702 that had it expressed the authority to -- before the solyndra a rose, that would have reached the same conclusion reflected in the opinion and its conclusion is the cool and corporate i ask unanimous consent that this letter be included in the record today. >> so ordered. >> along those lines, i would like to hear from secretary with restructuring the loan guarantee. third, a book like to hear from the secretary regarding the status of doe's efforts to modify the loan guarantee and the extent to which this has evolved over his tenure. i hope the secretary can give us
insight into whether solyndra make accurate representation to doe corruptive on process. and finally, given the majority heavy emphasis on allegations relating to corruption, we also need to hear from the secretary whether political fund-raising by mr. keiser or anyone else had any bearing on decisions relating to the solyndra loan guarantee. i hope this 3 ring circus lease to a robust discussion leading to the state of our energy policy. in particular, renewable energy. this is an excellent opportunity for us to learn how to best implement policies that provide u.s. innovators the support they need to make the united states a clean energy market leader. thank you very much. >> i now recognize the full chairman of the energy and commerce committee, the distinguished mr. upton.
>> welcome, mr. secretary. the central focus of the investigation is to understand why the only did and what it did and how we find ourselves for this taxpayer-funded debacle. the number of red flags that were raised along the way, many from within doe, and either ignored by officials, is astonishing. before the loan guarantee was approved, doe and omb staff question to the health of solyndra and based on the rate it was burning through cash and other issues, the expert staff or in deep concern that the company was about to fail. we have heard from president obama and from you, mr. secretary, that nobody had a crystal ball and could have predicted solyndra's demise. doe staff did predict this. one of the models showed that
solyndra would run out of cash in september of 2011. in march of 2010, six months after the initial agreement was finalized, solyndra's auditors echoed the same issues about capital and losses and warned they would have problems staying afloat. these concerns were shared by experts and reached the highest levels of the west wing. doe officials were shrugging it off. two months later, the president went to solyndra's headquarters and gave a speech. these are a few examples of the red flags doe could have acted on to limit taxpayer losses pick instead, at every opportunity, solyndra ,doe officials assured the american people that solyndra was on track and would
eventually drive up until the time that it declared bankruptcy. they continued telling the story even when they should have known it was not the case. doe was receiving reports showing that solyndra was bleeding cash and going bankrupt. doe failed to mention they were continually taking extraordinary steps to keep solyndra on financial life-support. mr. secretary, what did you know about the situation? when did you know what and how did you act on that information? these are important questions that we will be asking today. root testimony is an important piece of the overall puzzle. we will work methodically following the facts to get to the bottom of why taxpayers are now on the hook for more than $500 million. i yield the balance of my time. >> mr. barton is recognized. >> thank you, secretary, for
being here. we appreciate you to testify about the solyndra loan guarantee program. i have been on this committee 25 years. rarely have i seen a more mismanaged program than the solyndra loan guarantee. we're hopeful you will be able that answer a number of our questions today, and as a man of integrity you will do your best because i sincerely mean that, that you are a man of integrity. the first question is, and i hope you will be answering it, why did the obama department of energy reverse the bush department of energy decision that the solyndra loan guarantee was not ready for prime 10? to this day, that puzzles me. i would like to hear your answer as to why you made the decision to violate the letter of the
law and title 17 of the energy policy act that states that a loan guarantee financed by taxpayers cannot be subordinated to private investors. that absolutely puzzles me. finally, what guarantees do we have on behalf of the tax barriers that cheap -- text pierce that changes are hard to be made in existing loans have been put out to the tune of $16 billion, that we will not have a repeat of this fiasco? this is an important program. i happen to continue support a loan guarantee for alternative energy, contrary to what my friends on the other side of the aisle state. but i cannot continue to support it if we cannot get assurances that this is not on to the history that will be repeated. thank you, mr. secretary, for
being here, and i look forward to your answers. >> i recognize mr. waxman. >> mr. secretary, i want to welcome you to our hearing today. i believe this oversight on the solyndra loan guarantee issue is part of our job, we want to know about these taxpayer dollars that have been lost and how we can learn from this experience not have it repeated. but i do not support the weight chairman stearns and chairman upton had been running this investigation. they held an empty chair hearing pick they humiliated witnesses for asserting their constitutional rights. the tonight democratic request for witnesses. he resisted the release of an exculpatory documents. just last week, they released
jerry pate emails never contradicted by other documents and unjustly smeared george kaiser. we learned today in the newspaper, criticized you for awarding loan guarantees at the same time they were seeking loan guarantees for solar energy projects in their own districts. that is no way to conduct a responsible investigation. which should be fair and impartial and our goal should be to find the truth. we also need to put this investigation into context and ask the most important question -- how do we make the transition to the clean energy economy of the future? last week the international energy agency released its world energy outlook. while solyndra's story made news, there was no coverage of the international energy agency's findings, yet they are far more important to the future of our country and the business
of this committee and whether the department of energy and -- ast cylinder to delay closing a plant create the international agency found we can not to delay further action to tackle climate change if the long-term target of limiting the global average temperature increased to degrees celsius is to be a cheat. if stringent action is not forthcoming, by 2017, the energy-related infrastructure then in place will generate all emissions and allowed. what this means that our future depends on developing clean energy. there will be $38 trillion invested in the new energy infrastructure over the next 20 years. our economic growth, national
security will be determined by whether we succeed in building these new industries. our competitors recognize this. china spent $30 billion to subsidize solar energy in the last year alone. jobs and manufacturing facilities are booming in china as a result. the chairman of the subcommittee says the answer is to give up. last month, mr. stearns said the united states cannot compete with china to make solar panels and wind turbines. what i do not believe in is surrendered. jectucceed we have to read the policies but republicans in congress and their allies. the agenda of congressional republicans is clear -- do everything possible to maintain our addiction to fossil fuels'
and cripple creek energy companies that could compete oil and coal. house republicans voted against putting a price on carbon pollution, which would have created market opportunities for clean energy. house republicans voted to slash funding for energy research and development into the clean technologies. now they are opposing government investments in solar, wind, and other clean energy companies. we need to move past solyndra at to begin addressing our pressing energy challenges. the blue note records before the committee -- and we have received over 186,000 pages of documents and the department of energy, over 30,000 pages from the office of management and budget, over a thousand pages from the white house, nearly 200 pages of documents from the treasury -- all of these records showed the decision to award a
loan guarantee to solyndra was based on the merits, not political considerations. as a bush appointee mentioned, the integrity of the review process was never compromised. it is time for house republicans to stop dancing on solyndra's grave and start getting serious about energy policy. it is shameful for members of this committee to deny the science and pretend we do not need a comprehensive clean energy policy. something far more important is at stake today than scoring partisan political points. the future of our economy and the help of our planet will be at risk until we find a way to come together and enact policies that stop weather-changing carbon pollution and make our nation the world leader in clean energy. thank you, mr. chairman.
>> since you mention my quotation, it was taken out of context, and without elaborating, i would point out that if we intend to subsidize our industries to compete with china, who are subsidizing their industries, that is not a good way to handle it. we welcome our witness and thank you for coming. you have a book your left there with tabs of lots of quotes that members will be using. before we go any further, which had a member from the full committee, from kansas, -- from illinois, is rather here, but he would like to be here in the hearing. with unanimous consent, is that acceptable to the minority? so ordered. as you know, mr. secretary, the
testimony you are about to give is subject to the united states could. when holding testimony under oath. do you have objections to testifying under oath? >> no. >> that chair advises you under the rules of the house and the committee, you are entitled to be advised by counsel. do you desire to be advised by counsel drew your testimony today? >> no. >> please rise and raise your right hand. do you swear that the testimony you are about to get is the whole truth, and nothing but the truth, so help you, and guide. -- so help you, god? >> i do. welcome, and you are welcome to give your opening statement for five minutes. >> thank you, chairman stearns, ranking member degette, and
members of the subcommittee for the opportunity to speak with you today. investments in clean energy reached a record $243 billion last year. solar photovoltaic systems alone represent a global market worth more than $80 billion today. in the coming decades, the clean energy sector is expected to grow by hundreds of billions of dollars. we are in a fierce global race to capture this market. in the past year and a half, the china development bank has offered more than $34 billion in credit lines to china's solar companies. china is not alone. to strengthen their countries' competitiveness, governments around the world are providing strong support to their clean energy industries. germany and canada operate government-backed clean energy lending programs, and more than 50 countries offer some type of public financing for clean energy projects. in the united states, congress established the section 1703 and 1705 loan guarantee programs as well as the
advanced technology vehicles manufacturing program, all of which provide support to cutting-edge clean energy industries that involve technology and market risks. in doing so, congress appropriated nearly $10 billion to cover potential losses in our total loan portfolio, thereby acknowledging and ensuring that the inherent risks of funding new and innovative technologies were recognized and accounted for in the budget. we appreciate the support the loan programs have received from many members of congress, including nearly 500 letters to the department, who have urged us to accelerate our efforts and to fund worthy projects in their states. through the loan programs, the energy department is supporting 38 clean energy projects that are expected to employ more than 60,000 americans, generate enough clean electricity to power nearly 3 million homes
and displace more than 300 million gallons of gasoline annually. these important investments are helping to make america more competitive in the global clean energy economy. today, we are here to specifically discuss the solyndra loan guarantee. the department takes our obligation to the taxpayer seriously, and welcomes the opportunity to discuss this matter. as you know, the department has committee's investigation, providing more than 186,000 pages of documents, appearing at hearings, and briefing or being interviewed by committee staff eight times. as this extensive record has made clear, the loan guarantee to solyndra was subject to proper, rigorous scrutiny and healthy debate during every phase of the process. as the secretary of energy, the final decisions on solyndra were mine, and i made them with the best interest of the taxpayer in mind. i want to be clear. over the course of solyndra's loan guarantee, i did not make any decision based on political
considerations. my decision to guarantee a loan to solyndra was based on the analysis of experienced professionals and on the strength of the information they had available to them at the time. the solyndra transaction went recognized outside the mit's "technology review" in february of 2010. it is common for it to take some time for startup companies, especially manufacturing companies, to turn a profit. and in the two years since the department issued the loan guarantee, solyndra faced
deteriorating market conditions. solar pv production has expanded at the same time that demand has softened due to the global economic downturn and a decline in subsidies in countries including spain, italy, and germany. the result has been an acute drop in the price of solar cells, which has taken a toll on many solar companies in europe, asia, and the united states. meanwhile, countries like china are playing to win in the solar industry. china has invested aggressively to support its companies, and in recent years, china has seen its market share in solar cell and solar module production grow significantly, to roughly half the market today. facing a liquidity crisis near we believe our portfolio of loans is responsibly administered. the department is committed to
applying lessons learned in everything we do because the stakes could not be higher for our country. when it comes to the clean energy rates, america faces a simple choice -- compete or accept defeat. i we believe -- i believe we can and must compete. i will be glad to take your questions. >> thank you, mr. secretary. we have a book your left we will ask you to look at. when i ask a question, i request that you answered yes and no. in that book there is an interview that you had with cheryl co -- with carolco -- with "the wall street jounral." he replied you wanted have to be spent in the year.
are you aware department of energy, inspector general, testified this month the department had spend only 45% of the stimulus funds nearly three years later, yes or no? >> i am aware -- >> so this stimulus program failed to meet your target you set. is that correct? >> that is correct. >> you have repeatedly stated in hindsight -- no one could have predicted cylindrical aren't bankrupt. in august of 2009, before you signed off on a loan guarantee, one of your own staffers predicted that solyndra would go bankrupt. i will quote, the issue of
working capital is unresolved. solyndra agrees the model runs out of cash in september, 2011, even in the best case without stress. the bankruptcy was predicted two years ahead of time. knowing this assessment, you continued to give money to solyndra all to the next two years even though your staff had predicted solyndra would go bankrupt in september, to dust 11. when you signed off on the guarantees, were you aware of this? were you aware of that, that solyndra was a bad bet? >> sir, this is not a yes or no question. >> you want the information? >> can you give a short answer? >> the cash flow had to do with
the construction of that facility, if you look at the full analysis of that facility and the cash flow, it was gone to go rapidly into the black. that facility was completed on time on budget, and the parent -- >> were you aware of these doe emails that said it would go bankrupt? >> i was not aware of that at the time. it was an issue of land and analysis -- >> you were you aware your staff was predicting bankruptcy in 2000 -- >> it was not predicting bankruptcy. it was predicting a cash flow issued that did not appear in reality. >> were you aware of that at the time? >> was not aware. >> the chief financial officer
of the doe said they did not valid date any assessments of the chinese market. was that in hindsight something that the department should have known? >> repeat the question. >> did you do research about chinese markets before you approved this loan? >> i am personally sure i did not do that -- >> when solyndra ran into problems and authorized funds to dinated, you are aware that funds could not be subordinated under the energy policy act of 2005? >> when we discussed the subordination of the loan with my general counsel, it was the decision of the general counsel of the department of energy, their opinion was that the
subordination was proper. >> ok, the president recently appointed mr. allison to look at the portfolio. does the fact that the president appointed somebody outside of doe make you think that you did not have the financial acumen to step in and understand what the condition of all these loan guarantees -- does this not mean that the president has lost confidence in you and your management, financial management acumen of this loan guarantee program? -- we welcome greater tha welcome outside eye. for that happened, we looked outside -- >> you do not take it as a personal affront on your integrity to run the doe?
>> no. 11 -- inyou aware into th 2011 that the chief department of the financial department of the treasury said he had never seen tax appears subordinated to outside commercial loans? >> no, i am not aware of that. >> do you think he is right? >> i believe other loans have in some cases subordinated loans. >> where they are talking about tax payers? >> my time is expired. we recognize the gentle lady from, wrapup. >> take you very much, mr. chairman. secretary, dick northeast obama campaign donor contact your
ascii to take action related to the solyndra loan guarantee or to the restructuring of that loan? >> no. >> you are under oath. >> yes. >> are you up personally aware of any contact by any obama campaign donor to any employee of the department of energy asking them to take any action related to the loan guarantee or to the restructuring? >> i am not aware of any. >> have you asked your folks, your employees? >> no one has said that that something like this occurred. they in fact said that to the best of their knowledge it has not occurred. >> did anyone from the white house ever contact you to take any action on the solyndra loan guarantee or restructuring for any reason other than the
actual financial analysis? >> no. >> are you aware of any contact from the white house to anybody in the doe, asking them to take unusual action relating to the loan guarantee or restructuring? >> no communication of the white house to the department of energy to make the loan or to restructure its. >> in your responses to the chairman's questions, he said the decisions were yours based on professionals within the department. can you describe the process for -- originally the loan was not approved under the obama administration. it was the bush administration. tranches of money were given under the stimulus and there was the restructuring, so the question is, which professionals did you rely on to make those decisions? >> what happened when i came in as secretary of energy is that,
beginning with confirmation hearings, interest in the loan program, and getting it going. when i came into the department, i asked, what are the loans first in line that had been prepared, and i was told by the department of energy career people that solyndra was the first loan. they were first in line. >> these are people who had been there previously? >> who had been there during the previous administration. they said this was the first in line. it went before and early january to review committee -- the review committee, and the committee said there was incomplete information, we needed more information. market surveys, things of that nature. they gave it back to the loan originators, again, career people, and said we need more information because it more we
can make a decision. that is what happened. one set a career people told the originators say when we need this additional information. >> then what happened? >> several months later, after these things were obtained, market surveys, they came back to the credit review committee and at that time the same career folks that had satisfied progression and we recommended moving forward. >> some months later the bottom fell out. why do you think that happened? was it improper reviews and data released by the career people in that analysis? briefly, because i have that -- >> the largest issued of why that happened is the price of solar panels dropped precipitously, and i
precipitously i mean in the single year it dropped 40%. >> is that because of china's infusion of capital? >> there is a large production ramping up in china, and there was a softening of the market in europe. a lot of subsidies were being -- they were decreasing, and the demand was softening. >> at some point there was a decision to restructure the loan, correct? >> yes. >> why did the department just not walk away? time, thet ttim department knew we had a half completed factory and it was a difficult decision. we had two choices. we either had to stop a lone, which would make it go into
immediate bankrupt, with a half completed factory, or we could say we could continue on the contract of the loan, which was to build this factory. once the factory was complete, solyndra would have a fighting chance of continuing or it could offer that factory sale as a whole unit. >> there was some hope you could recoup the taxpayer money? >> yes. >> what was the decision made to subordinate the government plus interest to the private investors of the load in the restructuring? >> at that time, in the time we were dispersing the loans, there was a contractual arrangement, investors were putting in more equity, and as the changing conditions dictated, investors said if you want us to put another $75 million, this first
7 $5 million energy. again, after discussing the legality of that, and our general counsel advised me it was legal, we faced this difficult decision. do you stop giving them the money that was agreed upon and force them into bankruptcy, warty you go forward? this difficult decision -- it was a difficult decision, and we were always focused on that path that could get as much tax payer recovery as possible. >> i recognize that chairman upton. >> were you aware of that doe staff was concerned the company had a liquidity problem in 2009? >> yes. a liquidity problem -- it was a
temporary liquidity problem in the project which is what we were funding, but it was only one month. >> that goes back to the question mr. stern's ass, but on october 8, two dozen -- to the question mr. stern asked, but on october 8, the situation had changed. it would not be able to get capital by the end of the year. without access to the loans, the work that has been completed, solyndra would run out cash. that is there in addition to the emailed that was sent in 2009, which said they would run out of cash by the end of august 2011, which was true. were you aware of it either one
of those two emails? >> i do want to not conflict the issue. >> a just to me there is a pattern, that they announced they were going to run out of cash. >> there was one instance in the construction of the project, which is the first one you were referring to, and if it goes into next month, it will go into the black. history shows factory was constructed on time and on budget. >> nearly a year ago they indicated they ever going to run up without access to funds and would run out of cash in november of last year. are you aware of those emails? >> i believe this emails were
about the construction of the factory. >> were you aware that a cash burn rate of $10 million a week? >> we knew their business model -- this is true of many companies -- he had a cash burn rate, you build up your factory, you build up your sales, began to sell your product, and there was a plant that they were going to be -- nearly the $1 billion of equity investments knew of this plan. >> were you aware in 2010 that awareomb and treasury were concerned that doe was not monitoring alone? >> we were in fact monitoring the loan. about that time, we started by monitoring the loan and then we set up later in a different entity. a person that was not part of the loan origination by that time was beginning to monitor
the loan. we further set up another organization within the loan program to monitor the loan, and now what we have done is set up organizations outside the loan program -- >> were not monitoring it very closely until after it was restructuring. -- restructured. do you stand by the restructuring? >> this was a difficult choice. >> so you do. >> it was a difficult choice for us to make, and at that time that we thought the for 75 million -- the company -- the investors would not put in the additional 75 million in order to continue this project. it was the choice of either facing immediate bankruptcy as i said before. >> because of that decision, how much money do you think the federal government will be able to recover?
>> that remains to be seen. not very much, but we would not have had we said stop disbursement of funds, stop completion of the factory, and had half a factory. we felt we were not going to recover much of anything at all at that point as well. >> documents show negotiations between solyndra investors betweendoe cantu ahead -- between doe last august came to a head. the decision was collectively no, stop, and two days later they declared bankruptcy. what was doe's position ? were they in favor of this?
>> no. we got another outside independent firm to give us their estimate of the condition of solyndra. >> you were afraid to send more good money after bad? >> at that time in august of 2011, july of to does 11 -- july of 2011. >> based on what you know, do is to apologize for that $500 million that is out the door? is it doe? >> extremely unfortunate what has happened, but if you look at the time decisions were being made, was their incompetence? was there any influence of a political nature?
i would have to say no. >> so no apology? >> it is extremely unfortunate what has happened to solyndra, and you and i both feel the same, but when the bottom of a market falls out and the prices of solar decreases by 70% in two and a half years, that was totally unexpected, but if you look at the range of predictions being made by analysts from 20008, the average there is some out lyders, but the average they were not expecting the price is to plummet. this company and several others got caught in a very bad tsunami. >> the gentleman's time has expired. >> thank you, mr. chairman, i hope you'll be as generous to me
as you have been in allowing me -- as you have been in allotting time to other members. many house republicans night climate change is occurring. are they right? climate change a hoax? >> climate is changing, and there is much compelling evidence to suggest a large part of it is due to human activity. >> that is because most of our world's energy comes from fossil fuels that and that quantities of carbon pollution? >> that is correct. greenhouse gas emissions, carbon dioxide being the biggest one. >> does all prosperity in the future depend on building new energy industries? >> yes. >> that is for stopping the
climate change, if that is possible, is that correct? >> that is absolutely true. because of these two factors, we will need a clean energy. there is another factor, if you look at the market and the price for solar and wind, the expectation is that wind right now costs 7 cents a kilowatt hour. this is getting in the range of the cost and any new form of energy. >> you mentioned in your statement china and germany -- are we in a race to make the solar panels that will be the cornerstone of the clean economy of the future? >> yes, we are perry >> i ask these questions because they are the lens. it was a risk you thought it was worth taking. members on this committee said
they are shocked that you would invest in the company as risky as solyndra, but in march 2009, before solyndra received its conditional commitment, he said publicly you for going to set aside some loan guarantees for higher-risk projects which were projects that had a default rate as high as 10% to 30%. i want to show you on the monitor. we should be making some higher- risk loans. these would be much more innovative, might be more likely to fail, but could create bigger changes in the long run. he said this in march 2009 before cylinder received its loan. make the lawn, were you aware that the company might fail? >> they appropriated $10 million
to cover the loan losses. congress knew of the risks. >> your reputation for integrity is unimpeachable. you told us he gave solyndra a loan guarantee that you knew was risky because we are in a race with china and other nations to develop clean energy economies for the future. republicans take a different picture. they say he gave solyndra a loan guarantee as a political favor to a campaign contributor to president obama. can you tell us unequivocally that the decision to give solyndra a loan guarantee was based on the merits? >> absolutely, it was based only on the merits. >> can you tell us that contributions played no role? >> yes, they played no role. >> it is obvious what is going on in this hearing room. republicans are manufacturing a
scandal, try to discredit you, the president, and clean energy companies. a great deal, if you are an oil company, or at cole executive, but it is a disservice to the american people. this decision was made on the merits build a clean energy economy. there's no evidence to support the allegations of political favoritism. republicans on this committee have said they have not been able to get the information they have requested. your department has already turned over to this committee 186,000 pages of documents. is there anything you are holding back? >> know. we have instructed my staff to be as cooperative as possible with this committee. >> over 1000 pages of documents from the white house.
if the white house was giving to this committee, but the committee rushed to subpoena to force it. with all these documents in before this committee, i do not think republicans have been able to sustain the accusations they have tried to make mainly on innuendo, this was a loan guarantee that should not have been made or that should not have been continued when the loan was restructured. i thank you for your cooperation in to date's -- in today possy hearing. >> i recognize mr. parkton. >> -- i recognize mr. barton. >> mr. waxman just made a big deal about political influence, and you stated that you were not
aware of any. i believe you believe that. who at the white house or the department of energy, since there was no political influence, asked solyndra to delay the announcement of layoffs until after the election in 2010? >> i do not know. i just learned about that. >> you do not operate in a total vacuum. you know who george kaiser is. >> yes. not at the time of the restructuring. i now know what his connection is, his role has been. he is one of the equity investors. >> i believe you are being truthful when he states he never asked you about this loan program. i believe that. it is the elephant in the room.
everybody and their dog knew who he was and what he was involved in and we have on the record he was around the white house at least 16 times in the time. but the solyndra loan program was being reviewed after the bush administration said it was not ready. i will ask you a series of questions here and i hope he can answer them with a yes or no answer. can we put up on the screen the energy policy act, section 17 .02. i'm sure you have read the section of the energy policy act, regarding subordination, and it reads, item number three, the obligation shall be subject to the condition that the obligation is not support it to any other financing. you have read that, right? >> yes. >> do you understand what the word "shall" means? >> ys.
>> i believe the restructuring program was in violation of this law because your department did not follow the plain language of the law because the obligation shall not be subordinate to other financing. since he made the opposite decision, who did you consult with before you make that decision? >> at general department counsel of the department of energy. under the conditions of the road or origination of the loan -- >> susan richardson? >> no. bud harris. >> who is susan richardson? >> she is a counsel. >> i understand she is the chief counsel of the loan program? >> yes. >> it should consult with you?
>> she consulted with the chief isnsel's office, and there discussion about the issue, and when it was brought to me, it was their opinion that this did not violate the terms of the law. >> when did mr. harris and bring that to you? >> >> suisse as we were discussing whether we should subordinate or not, and it had to do with the restructuring. before we could even think of restructuring, we had to make sure it was legal. >> what date was that? >> i do not remember. >> i do not want to cut you off, but the reason the date is important is the decision was made to subordinate before the memo accepting subordination was
prepared. there was a decision and then after the decision was made, the decision was made to subordinate, but the action mel which authorized was not signed until after the decision had been implemented. is that true to your knowledge? >> no, i would not know that. that is not the way we do things in the department of energy. >> does the name of the law f irm morrison and foster familiar to you? are you aware they prepared a memo saying this insubordination was illegal and should not be allowed? are you aware of that? >> no, i am not aware of that. >> they were asked to prepare a
draft memo and will prevent your counsel saul was in the memo, they said we do not want to hear that. are you aware of that? >> i was aware that there was a lot of talk between ms. foster's offic.e >> i recognize the debt member from michigan. >> -- i recognize the member from michigan. >> did doe hire consultants and help analyzing markets and other areas of concern to the loan program office? >> yes. >> did the loan program office share information with omb and doe during due diligence
process? >> yes. >> was that process open and transparent and w? >> we shared a lot of information. >> mention that members of congress submitted letters for projects in their districts. i have no -- i happen to know i did. we submitted it together for a project in michigan, which happens to be in trouble because of a similar market collapse. now, did doe or the loan program office take these letters into account when examining loan applications? >> yes. >> so is correct that doe or the loan program office to examine the merits of the applications and did not consider any influence from the congress or the white house? >> we did not consider any
influence. >> now, let me look at this. we have heard complaints about the fact that the federal guarantee was subordinated to private loans. it was superior to earlier problems, was a not? >> yes. >> it was not superior and it was subordinated to subsequent private loans, is that right? >> the first $75 million of additional loans. >> without that step, you would not have been able to get private money to assist the federal guarantee in saving solyndra? >> that is correct. >> i am aware that this committee has issued documents of subpoenas to omb and the white house, and we have not
done so for your agency and for your department. you provided us with over 186,000 pieces of documents related to this issue. are you aware of these documents included in communications between me doe and the white house? >> are you up asking me if i am aware of all 186,000? >> are you aware of any of these documents that were communications between doe and the white house? >> i am not sure what indications they were between do e and the white house, but we did not commit a cake with the white house whether we should approve of loan, especially those solyndra loan. >> did you have any personal communications with president obama, vice president biden, for
campaign donors or others who had financial interests in solyndra? >> no, i did not. >> based on information you have received and have reviewed regarding the due diligence done by doe during the bush and obama administration's, do you believe the solyndra loan was awarded based on the merits of the application, yes or no? >> it was awarded based on the merits of the application. >> de you agree with the statement. i believe you had a law said he should make these guarantees then you have a situation where the chinese are eating our lunch. they are producing batteries and solar panels and all kinds of things because their government,
through that china development bank, has offered more than $35 billion in credit lines to chinese solar companies alone. other countries are doing the same thing. japan, korea, and probably others in south asia. having said this, and germany and canada are doing exactly the same thing, so you found yourself in a position where you have a law that says you have to do something, you have pressure on your hands, and you were trying to produce jobs and you had an industry you were trying to develop in the united states so we are going to be able to compete instead of the chinese dominating the market, as they seem now to be proceeding to do. is that a fair statement? >> they certainly want to dominate the market, and we were executing the laws as past by
contrast. this is a worldwide competition. >> what caused the problem as near as i can gather is that the market collapsed. is that right? >> the price of solar modules plummeted, that is correct. >> i yield back the balance of my time. >> thank you, and the ultimate question before this subcommittee is really, was it a meritorious loan? is this something that should not have been finalized? that is why you're here so we can ask the questions. first of all, the solyndra loan was finalized in september, 2009, is that your understanding? >> that is my understanding.
>> you are one of the -- you have that premier reza make, one of the most respected people in the cabinet, you were sworn in, confirmed easily. what was the first day you took office? >> january, 22. >> when were you first briefed by doe staff on the solyndra application? >> i do not know about the application quite candidly. early on once i became secretary i was focused on trying to get the loan program going. that was a central theme among many. >> you cannot identify when you were first briefed on this loan? >> early on --
>> certainly you knew about it before september of 2009? >> yes. >> ok, then he testified earlier that you were aware of the january 9 credit committee voted against offering a conditional commitment to solyndra, noting a number of issues unresolved makes a recommendation for approval premature at this time. were you aware of that generates 9 decision prior to the loan being finalized? >> i am aware of it now, but was i aware of it when the loan was being finalized? it is safe to say it was --anded, and
>> he did not know it was premature at the time until later on? >> there are many instances -- it is incomplete -- >> did you get a credit committee had questions regarding the nature and strength of the parent guarantee for the completionand the abilie production? were you aware of that? >> i was aware at the time. this was before march. >> you received a briefing in
march. >> i am not sure when i received the furs. -- the first. >> february 12, 2009, the doe stimulus adviser stated "litmus test for the loan programs ability to find good projects at solyndra is the litmus test." were you aware of this? >> of course. this was matt rodgers. we felt very focused to make the program something akin to about
a year. >> he stated that on february 12, 2009. it did you have a discussion around february 12, 2009 that solyndra is the list this test? >> i believe he meant that this -- >> i did not ask you for your interpretation. he said solyndra was a litmus test. were you aware of that statement? >> i do not recall. if he said that -- >> if you have a conversation with matt rodgers and around the middle of february of 2009 about the solyndra application. >> right. >> did you hire him? >> i did. >> was recommended by the white
house? >> no. >> you just said i need a stimulus advisor? >> yes. at the time, the economy was in free fall. we were losing hundreds of thousands of jobs a year. i wanted someone who could manage this huge portfolio to spend the money wisely and quickly. >> thank you. mr. chairman, could i interrupt briefly? i want to correct the record. the legal firm had specifically reviewed the susan richardson memo and approved that analysis.
your council approved that menemo. do we have a copy of that? if not, we would like a copy. dr. christiansen is what week show. you are -- we show. you are recognized for five minutes. >> welcome. we thank you for your willingness to help us better understand what is happening. wheen need to understand what is wrong with the solyndra loan guarantee. we should be supporting innovative technologies, what enough for the taxpayer. when need to understand the big picture.
the program does not just support solar wind and other renewable projects. a substantial project is available for nuclear projects. congress has authorized 18.5 billion in loan guarantees for planned construction costs. the bulk of the project has already received a conditional commitment. it would be worth over $8 billion. that is 16 times the size of the solyndra loan. a commitment has been provided for in a uranium enrichment facility. i think it is important to have a balanced program if we're going to provide billions of dollars for nuclear power plants. we should also support innovative geothermal projects.
what do you think? >> i agree. >> the renewable industry is in the early stages of development. some of the technology has never before been built at scale. we should be investing in innovative technologies. we should be investing in deployment of some of these innovative technologies. by doing so, we create a marketplace with in the united states. as we invest in manufacturing technologies, we are in the race of a high-technology race
that is in a sweet spot. the united states invented affordable technologies. i believe we it will be hundreds of billion dollars a year market. >> i agree. we just cannot afford to sit on the sidelines of other countries like china, allowing them to dominate the market. when we try to help u.s. companies compete against chinese competitors, not every project will succeed. we cannot let solyndra's failure be an excuse to give up on the market. can you share your thoughts about why we need to proceed in the energy market? we need to compete.
american companies can be successful. we invested in solar -- what policies should we put in place to help make this happen? >> let me tell you about the market. it is something of to under 35,000 -- 235,000 market. according to some recent analysis, by 2020, it is expected to be close to $400 billion a year. by 2013, but it is expected to be $416 billion a year. roughly 80% in wind and solar. by 200030, wind is expected to
reach parity. there is a debate as to whether solar is inexpensive as gas. there is a have the expectation in the business world that these technologies will become competitive without the subsidies. the whole issue, and this is why it is so important for the united states, do we want to be buyers or sellers? we have the intellectual capacity to be the sellers. >> with all of the investment comes jobs. correct? >> yes. lots of jobs. there is a world market out there. >> thank you. >> you are recognized for five minutes. >> thank you. were you aware that solyndra
sent the committee a letter on july 13, 2011 describing the financial condition? >> i cannot say the exact date but it was around the time the company was in trouble. >> it had the purpose of providing the most accurate information regarding solyndra. he also wrote "the revenue grew from $6 million to $100 million to $140 million. revenues are projected to nearly double again. price waterhouse cooper did the financial statement. they agree with that. there is no point that they mention. they did not mention that in 2010 revenue was half of the
$284 million they originally projected. they did not mention that the cost of was $284 million in 2010. it was a gross loss of 61%. operating expenses show it the loss from operations. solyndra did not mention that the net loss was $172 million in 2009. they did not mention that operations showed a massive outflow of cash. this is a large red flag. cash flow is usually a source of cash. cash flows showed it depleting
at a rapid rate from $82 million in 2000 aid to $32 million in in 2010. when did you become aware of this misleading information that solyndra submitted to congress back ?? what did you do? >> we became aware when weaver discussing what to do. -- when we were discussing what to do. as time progressed, we became aware that the progressions were not being met. by 2011, i knew this company was in deep trouble. >> when you testified, you said
you're doing the best job you know how to do. were you made aware of the fact that based on this that said the auditors issued a concern of qualification and doubt about the ability to do business? >> i am aware of that now. i think they were asked to assist and give an audit as to whether solyndra could have an initial public offering. due to the circumstances of the market and solyndra, they said this was not the time to have the ipo. >> did anyone read you the financial information and raise the concerns? -- review the financial information and raise the concerns? >> i am sure but not to what extent. >> did solyndra say how the
sales would cover the costs? >> i believed solyndra had expectations of sales that did not come to pass. >> their manufacturing cost was up to twice the revenue. that was part of it as well. >> i certainly knew they had sales -- they had to be selling at a discount. all companies -- solar panels are a commodity. when prices go down by 700 in 2.5 years, -- 70% in 2.5 years, you're trying to ride out the storm. >> didn't raise concerns within the department? was that talked about at all? >> the growing concern is a standard language in a startup
company. there is a question as to whether as you start the company the business plans, are you going to have negative cash flows? at some time, they turn positive. you have very savvy a investors. part of their business plan was that it would be some time now could 2011 before they would go into the black. that turned out to be incorrect. more recent projections pushed that back several quarters. >> thank you. >> the gentle man from massachusetts. >> americans are focused on the influence of the oil companies and others through the occupied wall street's movements. republicans are pushing their own pre-occupied movement in the hopes the americans will be too
preoccupied with this one loan to a company that they will not see the tens of billions of dollars in government subsidies given to the oil, coal, and nuclear industries. their results? we are getting a distorted picture. who we should really be talking about and not the bureaucrats at doe but the bureaucrats at china who are driving foreign competitors out of the seller market. they did it with the rare earths industries. they're doing right now with the solar industry. many of my colleagues on this committee thinks renewable energy is the stuff of the debt since -- the jetsons and as solar panels are like life size robot.
maybe someday way in the future. they are oblivious to the revolution. last year, 194,000 megawatts of new electrical generating capacity was installed on the planet. what percentage of that new electrical generation power came from renewable sources? half of its in 2010. half. solar is by far the fastest growing energy industry in in world. over the last five years, installments have increased 1000 percent to 17,400 megawatts in 2010. every new nuclear power plant that went online last year, four
times as much new solar capacity was deployed. in u.s., there are 85,000 employees in coal industry, at 85,000 in when the industry, and 100,000 in the solar industry. that is the story. solar has beat nuclear and coal. they are scared stiff. they have enlisted the republican party to do something. that is the real story. the republicans have been eliminated loan guarantees for renewable energy. they have left a $30 billion in nuclear and coal. they passed legislation to cut the budget by 64% but increase the budget for nuclear and fossil energy. they promised to cut investments
by 90% over the next three years. historically, there has been a lot for solar. for every doubling, the price declines by 18%. that was the case until this year. for the first eight months, but the price of solar panels has fallen 42%. it is a 42% drop in eight months. the irony is that the republicans attacked a because they claim it is too expensive, but solyndra failed because solar is getting too cheap. the price of solar and wind is dropping while coal and oil prices have risen. the republicans and the fossil fuel industry cannot let clean energy win. why has this happened? why has there been a 42% drop?
i will tell you. our country is in a race to become the leading maker of solar technology. we have some fierce competitors. last year alone, gave five companies $31 billion in financing. that is on top of domestic currency that is substantially undervalued and allegations of dumping by chinese states into the u.s. markets. do you agree this intervention has altered the market for solar panels and made it difficult for solar and for energy conversion devices to survive, at that the prices have plummeted and that there are individual companies that will fail?
>> i agree with that. china has targeted all renewable energies on their critical path for their future prosperity. but only for their domestic use -- not only for their domestic use but also for a huge export market. >> when the price of silicon dropped dramatically, '90s term -- 90% hurt solyndra because they were depending on that for a higher price point. it collapsed. >> that is correct. solar modules in general dropped 42% and 70% in a couple of the years. that is unheard of. it is violating the learning curve you spoke of. >> that is what happened was cell phone prices.
the price dropped 90% after we passed a bill. we decided to put those phones there. that is what is happening in solar market feared >> the time has expired. -- in the solar market. >> your time has expired. >> i hear my friends talking about all these jobs of have been created. you talk about all these jobs in renewable energy. looking at your website, it said it created 60,000 american jobs. is that true? >> i believe it to be true. >> these jobs seem pretty expensive. at least in the coal and gas and oil industry, we're not paying for these jobs. to their private sector jobs. -- bay are private sector jobs.
you obligated $10,647 million for the jobs. that is $1,625,000 per job. you obligated $16,128,500,000 for those jobs. that cost $963,585 per job. he obligated $9 billion. that is the cost of 221,005 under $57 per job. that is a lot. how you justify paying that much? 40 million people are out of work. paying for them like this is a really bad idea. what do you have to say? >> let's start with the nuclear
loan. i believe that something like and a billion dollar loan. the federal funds, the applicant that applied for the loan had to pay the subsidy for that loan. the amount of dollars that went into that a billion dollar loan was essentially zero. the company itself paid for it. >> do you stand by paying this much for these jobs? >> i am trying to explain that when you have a 1703 program where the applicant pays for the subsidy, they are -- that is not taxpayer dollars. >> back to the solyndra loan. would you do that again knowing what you know it today? >> certainly knowing what i know
now, we would say no. but you do not make decisions in the past. >> how closely were you involved in the long process? >> i have to approve the loans. i have to be briefed on all the loans. i ask questions. >> with the respect to solyndra, were you aware of a reported zero sales in 2005-2007 f? >> 2005, i'm not sure they had it. it was first formed as a company. the first that you build a factory and product. the new sale. >> in 2010, you were secretary. did you notice cylinder was
having difficulties? they said that to you. >> by 2011, we knew that there were. >> did they discuss with you that they would have to lay people off and do some downsizing? >> they did not discuss that with me. >> it did they discuss that with anyone at the department of energy? >> they may have discussed it with people in the loan program. >> they were aware that solyndra was having some difficulties in 2010. yes or no? >> i would say people in the loan department would know better. >> no. who but the pressure on you to delay divulging that knowledge until after the elections that ? >> there is no pressure. i would not have been in favor
of that decision. >> i believe you to be truthful. someone put pressure on them to not delay divulging that information until after the elections. that is very political. i believe it was done for political reasons. do you think that is a proper way to do business? >> no. >> who at the white house put pressure on you to get the loans so quickly? >> no one in the white house. we never cut corners. if you look at the average time of due diligence, it is something like 300 days. >> would that be no information on projected sales are estimated net profits? is that proper due diligence? >> the business plan of
solyndra and any startup company is that as you're building a factory in sales, you expect to be taking off. they expected to be in the red until sometime around 2011. with that business plan, there is a lot of savvy investors who spent billions of dollars before the u.s. government looked at it. >> thank you. >> i recognize the gentleman from texas. >> thank you. thank you for appearing before the subcommittee. this is a great concern to me. we put the loan program into effect. it was a program championed by both democrats and republicans in 2005 and passed by a republican house. when i voted for the 2005 energy bill, i never intended tax payer money would be made a lesser
priority than outside investors. we saw the section of 17 01d3 minutes ago. they said that is really not true. this is one that we look at. i understand the money was coordinated to lose outside investment as part of restructuring. can you explain how they came to this conclusion that you would be living up to your share of relationships as secretary of energy just like we have with the tax payers? i did read the section in the opinion. i disagree with the opinion of the outside counsel. was it based on the outside counsel opinion to the department of energy?
>> we went there a very rigorous process starting with susan richardson and the general council office. also, outside counsel. the previous general counsel of the department of energy also confers that it was a decision that was within the bounds of the law. this was a decision that was heavily bedded -- vetted through our system. the first one was in the instance of the loan would be subordinated. it was very clear. the record stands for itself on the decision both by the memo that was communicated to me through scott harris and also outside counsel. a previous general counsel of
the department of energy had no loan to pick and no one way or another. we have a number of people saying this was with the law. >> if you know of any federal agency ever subordinated a federal loan to an outside investor? >> when a loan is in trouble and in case of a restructuring, i do know, i have been told in very opecinstances that xm or has done this. either the government takes an equity position or a subordination. when you do a restructuring, if there is not additional money, what we were facing was the imminent bankruptcy of a
company. we looked at both cases. whether a goes bankrupt now or later or whether you have a complete factor, it to be the chance of recovery. >> i have some concerns about it. i would appreciate any information. i cannot find any example of where we subordinated. i would appreciate if you could get that to us. i understand if you went with lawyers and previous council. as you know, sometimes you talk to attend a economists and you get 11 different opinions. -- to 10 economists, i you get 11 different opinions. hopefully in the future this will be the case that if we have to we will change the language to what the outside opinion
says. the language is clear. subordination should be subject to the obligation. i do not know how else you can read that except maybe getting around to say this is a second we are trying to refinance the loan. it seems the refinancing should be under the same rules as the original loan application. i cannot find any time in history. if we of the federal government, and i owe bank of america or chase, believe me the government get our payment first. that is why i think it is unusual that you may have had council that is not correct. did you talk to the department of justice at all? was there any effort to talk to the department of justice for an interpretation? >>no. i talked to our in-house
counsel. i also saw the opinion of outside counsel. it seem like subordination is not a common practice. was there any concern except for getting opinions of previous council our outside counsel that you are making president did. ? >> there was discussion. we could not subordinate to any other equity partners or things of that nature. there is another clause of in act that said above all we have to look out after the attack -- taxpayer interest and maximize recovery. >> was it ever offer that the taxpayers would take an equity portion of solyndra? in exchange for our secondary -- there is a discussion about
equity positions. this is a new loan program. i am not even sure if this will show. i was referring to opec. >> i would like to make sure that if we need to change the law, i do not think our committee made it clear. >> you did. you were on the conference committee when he made that law. >> i was on this committee. i support the solar, wind, and nuclear. i am disappointed we were not able to do a more aggressive program in in alternative energy. we need to change that law. >> he made an excellent point that talmudic mr. chu -- that
how mr. chu use the law was not how it was intended. >> that is your interpretation. my lawyer said otherwise. it is far more than your opinion. >> it is him that i'm agreeing with, not yours. >> at the solyndra groundbreaking you said the agency moved aggressively to get stimulus money out the door. were you aware that four days earlier the staff said "i would prefer that this be postponed until the first loan guarantee to make sure we get ripe." were you aware of that? >> i am aware of it now. >> were you aware they downgraded the downgrading because of the [unintelligible] >> yes.
the score went up slightly. >> there is an e-mail between the capital firm from march this "she was staying evolved in the solyndra application and talks of the company as a whipping." were you personally involved? >> solyndra was the first company ahead of the line. in order to get the loans out, promisingthe most loans? >> most promising is important. were you aware in the ipo filing price waterhouse cooper said it had substantial doubt
about the ability to continue as a growing concern? >> i am aware of that now. >> were you aware they express concern about the agency's monitoring of the loan? -- in the following month they expressed concern about the agency's monitoring of the loan? they said when evaluating the risk that doe separates the parent from the project. it is structured in a way that does not support it. we're you worried that the calculation was completely different from the omb model? >> there are a lot of robust discussions that go on. i think omb cannot object to the restructuring. >> were you aware that today's
before the president's visit the white house adviser and the chief of staff contacted your chief of staff to discuss their worries about the growing concern? >> i was not aware. >> at any point did you discuss the disagreements? >> i cannot say exactly. i certainly as time progressed. >> were you aware after solyndra canceled the ipo they suggested this to be a good moment to " insist they ramp up monitoring function immediately?" >> i was told that we were monitoring the law. i'm not sure the exact timing. solyndra was our first one.
we then established a program that has been made more robust as time progressed. >> you had a meeting with peter orszag about policy issues. the day before your meeting, they center agency analyst of information. it did you discuss solyndra? >> we were discussing much higher policy issues that a particular. >> he did not ask you for any critical information about solyndra? >> my recollection at the time was that we were discussing loans, for example about if you could get the loan plus 16 no 3 + other state subsidies and whether they might be getting a
policy issue. >> were you aware that if dow does not stay on top, it risks ?ecoming embarrassing t he said it was promising. we have other agencies saying this was not going to work out. were you able to draw this conclusion? >> i'm in the loan was the head of the line. people in the loan program were from the previous administration were there. >> i did not ask you where they were. i asked you if there were problems you were aware of.
>> after the assign credit subsidies, what that means a effectively is that there is a low probability at the time of the omb is information that one would enter into default. this was at the time was restructured later on. after restructuring, you reevaluate. they have this all the time. >> were you aware of the problems or not the? >> we're making a more robust. >> were you aware that do you admit there is problem with monitoring the loan? >> no. at the beginning, we began to set up the lawn my entering office. it was roughly the same time when omb said we should set up a
monitoring process. for fivecognized minutes. >> thank you. as you can see, the bankruptcy has generated political controversy as he might expect when taxpayers take a big hit. that is not a bad thing if we take lessons about the most effective means of government support for clean energy, the amount of risk we are willing to accept, and helping our country lead the others. i do not feel like that is the direction we have taken. what we have seen are misstatements of fact and selected documents out of context. i want to ask you some questions to see if we can get the record straight regarding the history. solyndra applied for loans during the bush administration. >> that is correct.
>> when you received early briefings, was solyndra presented as an ongoing application that had undergone due diligence and ready to proceed or was it presented as an application that have been rejected? >> it was presented as an application that they recommended we go forward with. >> i would like to address one refrain. the assertion that the bush administration rejected the application only to have it revised. it lists the priorities degenerate 15th. given the time of the e-mail, it is obvious since 2009.
i like to make this part of the record. >> so ordered. >> the application was reviewed by the credit community. did they raise questions about the loan and kept it for further consideration without president'prejudice. the director of the loan program since 2007 -- the committee interviewed steve who was appointed by president bush to serve as cfo. he continued to serve as cfo
until july 2011. do you have any reason to doubt the credibility of these individuals? >> no. >> they made it clear that the application was not in any way rejected by the bush administration. they stated that the team in the loan program office gathered more information and negotiated more equity split. confirmed that consideration at the application went on unabated as they left off the obama administration came into office. is that your understanding? >> it is. >> was it your understanding that it had been rejected or that the application was some on the shelf to be revised by the obama administration?
>> quite the contrary. they felt this loan was at the head of the line of the ones we should. >> they put to rest some of the statements that were made. it contradicts that record. i am happy we have the e-mail and the documents that clearly show this is something that is proceeding forward. i yield back my time. >> thank you.
>> thank you for being here today. thank you for your generous time your spending with the committee. i feel so energy as the place. i must say what has happened underscores it. it sets back this. it is regrettable what happens. it is the first two of the three products that you have approved. they failed. the president has said it could be a size failure. what is at a -- an
acceptable failure rate? >> $10 billion included this. >> i personally do not think we will get anywhere close. if you take the loan program in total, the atv program -- >> let me stop you there. they will not let me go over like others. you watch. here is the deal. the confluence of the loan guarantees coupled with the rabbit injection of dollars from the stimulus bill has led to some decisions being made. it has led you to behave like
capitalist. you hold the nation's secret. you maintain the nuclear arsenal. you are not supposed to be a capitalist takes risk. >> it is not a venture capitalist. the dissenting be on the initial statement. here are some appropriated funds. >> i was in private business. i understand what it is like to take a risk. you earned almost $1,000 a year. still burning $2,000 a year. do you understand how people are
uncomfortable with this concept for the department of energy behaving as a venture capitalist? >> this was set up by congress. congress appropriated $2.4 billion to account for the losses. >> as someone who is sitting here when it was approved, i do not think any of us could have foreseen what was a round the corner with the rapid injection. he said it was a difficult choice to make. >> we knew the company was in trouble. we were trying to maximize tax payer recovery. all our actions were focus on maximizing the recovery. >> this seems like a tortured
opinion. did you thing people can say this was a violation of the law that has been much talked about where taxpayer obligations were not allowed to the subordinated? do you understand the average person looking at this says that is not right? that should not have happened? >> i had the opinion of general counsel that i trusted. many went to a rigorous review process. >> i do not dispute that. you see how regular people will look at this. i will be the first submit that there was an oversight. there's no penalty for violation. at the end of the day, you're still burning your salary. do you feel that the zero people
an apology for having supported the taxpayer dollar for what turned out to be a risky venture? >> it is very rare what happened to solyndra. when the prices were falling out, we were focused on trying to recover as much as possible. >> have you discussed with your boss whether or not you should continue having violated the acted 2005? >> >> it is comfortable? >> we believe there was no violation of the law. >> that is a fairly torture of legal explanation that has been
provided. they were very uncomfortable with the subordination. i remain very uncomfortable. i think broadly across the country people understand that this was not right. >> let the record state that we let you go one minute over like everybody else. >> the gentleman from arkansas is recognized for five minutes. >> i believe it is important to members on both sides of the aisle to understand exactly why solyndra went bankrupt and to make sure the department of energy is doing enough to protect the taxpayers. there's been a lot of political rhetoric associated with this investigation. i want to take it beyond that and remove the political nature of it and try to get to the facts. the department of energy was not the only entity to believe in
solyndra. they made some of again investments. the wall street journal rang solyndra #5. and that same year, the technology review named cylinder one of the most innovative companies. hindsight is 2020. protecting the future is difficult. none of us like the end results. just as any banker does not like to make a long that ends up defaulting. it is clear the department of energy was not the only entity that the company had a good shot at excess. mark analysts and smart technology experts, wall street and other outside observers also got this one wrong.
how do we learn from this that had we move forward while continuing to advance alternative forms of energy tax is something i feel strongly about? -- forms of energy? it is something i feel strongly about. i want to ask you some questions. on the topic of due diligence, given your background, i like to get your views on why the department of energy and major private investors decided to bet on the company's technology. in 2007, they submitted the solyndra application to the energy lab in colorado for review. the lab gave solyndra the score of any one.
the ceo of ge. he said we think that this is going to be a competitive technology. we can cometpete head to head. in addition to developing technologies, they are experts. >> after their own review, solyndra was invited to submit a full application. during this process, they cemented a technology manufacturing review. they relied on studies by new energy finance. they relied on market reviews by a host of experts on energy
markets. given all of this internal and external analysis dating back to 2007, as it relates to solyndra, and you feel confident that they did their due diligence on the lawn? what can we do differently to make sure we are not here today? >> there is extraordinary due diligence and every loan. that is why it took a rough scale, even with the processes, a year or two years. there is the rapid drop in prices. companies all around the world are there.
>> i would encourage you to try to figure out what went wrong to keep this from ever happening again while continuing to advance. >> based on the solyndra experience, we not only have a separate team there is a group that it's headed by someone recruited, members of the national academy of engineering that understands the business very well and they provide another set of independent is that monitors the disbursements. we are going to be watching like
hawks, given the rapid changing market conditions. >> the gentle lady from tennessee is recognized for five minutes. >> thank you for being with us today. i feel almost a need to sit here and remind all of us in this room, this hearing today is not about solar power. the hearing today is about the possible abuse of executive power and of the taxpayers' money. we desperately want to get and we are being diligent in trying to get to exactly what happened with this process and where it ran so far afield. we have been through a series of red flags that existed and seem to have been transparent prior to the loan being approved, but i want to pick up right there. after that long closed in september 2009, at that point, did the 0 e require solyndra to
provide financial information or other additional data after that loan was approved? did you go back to them and say we need to find some additional data? >> after a loan is approved and as we go through disbursements, we are in constant communication with the company. these disbursements, we have a contractual agreement and as they build -- they have to build it as they said they would build, and we disburse the funds after that. >> you are in constant contact. the question is really s. arno. did you require additional financial information from solyndra? >> yes. >> were you aware that doe staff repeatedly raised the issue of solyndra's parent's financial help and a lack of working capital as a cause for concern?
>> there are two parts of this. one part was the working capital in order to complete the project, and as i said, there was a model that there would be an interruption of cash flow, but in fact upon re-examining this, it was not an issue and in actual fact, -- >> given that you were aware there was a possibility of an interruption of cash flow, why we do not have gotten additional financial information on their cash flow? >> during this time, there was communication with the company on this cash flow issue and again, it was related to me that this was a particular month and said this, and in the following month -- >> looking at lessons learned, does the d o e now require financial information about the
parent companies of its project financial deals? >> we always do, and as i said before, when there is a rapidly changing situation, we have additional sets of eyes, not only within the loan program but outside the loan program. >> and the loan programs office has engaged in the kind of enhanced monitoring that you are saying you have put on solyndra in these type situations. are you doing these with the 28 other companies in the long program? >> of course, we are monitoring all the loans on the minimum of a monthly basis. >> what about weekly cash flows? >> in some instances weekly. >> what about a board observer's seat? >> we did have a board observer's seat in solyndra after the restructuring and in that board observer's seat as we have with the investors, again
with the rapidly changing dynamic and the equity investors were as surprised as we work. >> you have talked about the savvy investors that were there for solyndra. they had a billion dollars in cash, but we keep hearing about that cash burn rate. was the doe in your opinion, and were you aware of those cash burn rate issues before or after that on was closed in september 2009? >> i believe they were aware of what would be happening in the business plan, and within the manufacturing plan, as you manufacturer -- >> we personally aware -- >> in general, i certainly have enough experience looking at star companies to know -- >> did anyone -- you
specifically on solyndra's cash burn rate issues? >> yes, they did. >> but not before the long clothes? >> not before the long clothes, not that i rick -- not before the loan closed. >> it was believed to be a healthy company at the time of closing. the bond rating was something like a b plus at the time of closing, as dictated by it -- >> let me ask you this. why did you allow that company to continue to pull down millions of taxpayer dollars after you discovered the financial problems in that company? >> that is an excellent question. as we began to know that the company -- the parent company had cash flow problems, we paced the decision.
you have a loan to build the factory. that we did the factory was two- thirds bill. if we had pulled the plug in, we were certain that solyndra would go into bankruptcy. then we did to analyses. you completed the factory and sold the factory as an ongoing concern, and give them a fighting chance to survive as an ongoing company, what was the probability? we face the difficult choice and we fell the highest probability of recovering as much as possible taxpayer dollars was to disburse the funds. >> was it in the taxpayer interest or in the desire for green energy jobs that you made that decision? >> when you make a loan, we have a very green eye shade approach to the loan. it is a business transaction. we have to by statute of the law say that there is reasonable
prospect of this loan being paid back. having said that, we have been mandated to make innovative loans, and the loan-loss reserve was designed and appropriated by congress in order to take care of unfortunate events such as the one with solyndra. >> the gentleman from california is recognized for five minutes. >> thank you very much for being here today, mr. secretary. i had the pleasure of listening to testimony back on march 3 of 2010. at that time, you stated quite distinctly that you believe that nuclear energy remains a safe and secure an economic source of clean energy. do you still believe that today? >> well, if you are asking, yes, i believe nuclear energy can be safe and secure. >> that is all i needed to know.
you are a high-energy physicist. of anyone who has ever been sitting in that chair, you probably understand reality of that technology better than most if not all of your predecessors. you are also well versed in not just nuclear technology, but you have been on a steep learning curve when it comes to photovoltaic technology, too, right? >> the learning curve started perhaps 10 years ago. >> my question is this. you distinctly understand the difference, the advantages and disadvantages of bali, mano, an amorphous or thin film technologies, right? >> i do know the advantages and disadvantages, yes. >> do you personally own fate solar ray or potable take of any configuration? >> no, not on my road, -- not on
my roof, but a little flashlight solar. >> with what you know today, and if you were buying something today that you were going to put on your roof, and you had the choice of the three different divisions, which technology would you choose? >> it would really depend on price, the guarantee, the warranty, how long the panels would last. it would be an economic decision. >> knowing what you know what those three categories, with the same square footage, same price, would do not agree that a reasonable consumer at this time would be choosing either mono or poly crystal if you were going to use it on your own residence at this time? >> no, it is not clear. but then film technology is a
very good technology and this is why u.s. technologies are investing in part in these technologies. >> are you saying that thin film is equal to the other crew technologies? >> big bets for the future. next they are investing today. >> and the existing technology today does not reflect that? >> no sir, i would disagree with that. >> i appreciate that and i am very surprised you are disagreeing with that. when we make reference to china and china's investment, are you aware that the overwhelming majority of tiny investment is inpoly and mono? >> i am aware of that. >> the fact that the chinese were betting on the traditional, proven technology, was that in your understanding, or was that
sold as being a reason to move into a new, pretty radical concept of how to produce solar panels using that a marvelous technology? was there conscious effort that you were going to be the chinese by using a new type of approach that they were not willing to invest in? >> what the chinese do typically is taken existing technology and bring it to a very large scale and they get the economy of scale. >> was that a decision that the chinese were not placing bets on -- there could be a market opportunity to beat them to it? >> the chinese were investing in it but it turned out to be a bad bet for the chinese. >> it seems like it was a bad bet for us, too, on this one.
i think you will reflect that the stark -- of all starts in photovoltaics, the worst projects have been in amorphous. >> i think you mean it then fell on. first of all, -- i think you mean thin film. the reason they are investing in that technology is because first of all, since we invented [unintelligible] technology, there is more technological head room and then fail -- thin film. the efficiency is coming up much more rapidly. >> historically that has had a much bigger problem with durability and production except for very low like applications. you think the durability
traditionally has been equal? >> it is hopefully the new breadfruit we will see coming. >> it was developed at a national laboratory by two other companies and it is very competitive. >> was a letter proposing to do that? >> solyndra was proposing to use another technology. it has the same capabilities in terms of the overall efficiency at the time they were the same price in terms of production efficiency and they were making improvements. >> the gentleman from georgia is recognized for five minutes. >> i hate to start out with a sports analogy, but in regard to the restructuring of the solyndra long, i think i will
give you a little sports analogy. this sunday the atlanta falcons will play the world champion new orleans saints in atlanta and they went into overtime tied, and the falcon coach made the decision deep in his own territory to go for the first down, knowing that if he punted the ball back to the new orleans saints and their weight -- their great quarterback, they would be unlikely to stop them. so he goes for a first down, and he misses it. two plays later, the new orleans saints have a chip shot field goal and they win the game. so he takes a chance, makes a ridiculous decision, but it was not against the law. in this situation of restructuring the solyndra loan, i think what was done by the department of energy, despite what the council has said, is
breaking the law under the energy policy act. and i would just like to know from you, mr. secretary, when the folks at treasury, the people that actually made the loan, because this was not a $535 million loan guarantee, it was a long coming straight from the bank. they said to your folks at the department of energy, before you do this restructuring, i think you better get an opinion from the justice department. the department of energy ignored that and went ahead and got their own letter from in-house counsel and came up with some cockrum may idea of why it was ok to do this, and the law was broken. you explain the other day that your feeling about that was if you did not do it, the taxpayer
was very likely almost immediately to see a bankruptcy of the company and the total loss of the loan of $535 million, and if you restructured and allowed them to come in with $75 million more private equity, that might save the day. so it was a tough decision, and you approved and went ahead with this restructure over the long. clearly a breaking -- breaking the law. you saw a slight earlier, the language is pretty clear. the result was the same, not unlike what happened in atlanta this past sunday and coached smith made that fateful decision. my colleague here from louisiana says it was a good decision, but everybody says that this decision that you made was a bad decision. i just don't understand why you
did not go ahead and submit this to the justice department and asked one of their high-powered lawyers, assistant attorney generals to give you a legal opinion on that. why not? >> it is my understanding that one goes to justice if there is second it -- a change in the conditions of the loan. for example, if you decrease the amount that would be paid back work decrease the interest rates or things of that issue. it was not in the opinion of the council within the department of energy, susan richardson -- >> i apologize for interrupting you, but i don't think the folks within the department of energy or that loan program were the experts in that case. the bankers of the federal financing bank in the treasury department, clearly they are experts and all the sudden they
are worried about the loan. let me move on to another subject. i want to ask you if you are familiar with a recent washington post article. this is november 15, just a couple of days ago. the title of this, "solyndra, energy department pushed firm to keep layoffs quiet until after midterm elections." this article, i would like to ask unanimous consent to submit this for the record. >> so ordered. >> in this article, basically they are saying, the solyndra people, or trying to make sure that the bank, the federal financial bank will continue to advance them loan proceeds, maybe a little in advance of when they were due, and
basically the department of energy, according to this article, said we know you are going to have some layoffs coming up. has been leaked to the press, and we would prefer that you not make the announcement of those layoffs until november 3, one day after the midterm elections, and then of course they got their advancement of the loan. a little bit suspicious. do you have any comments on that at all, the timing of that? >> yes. first, i was not aware of any communications with our loan office with the solyndra people until that article came out. it is not the way i do business. i am looking at the loan, the prospects of repayment, and those factors are not part of our consideration. something like that was not discussed with me, and i would not have approved it. >> mr. secretary, i believe you, but this looks highly political.
>> the gentleman from louisiana is recognized for five minutes. >> thank you, mr. chairman. thank you for coming before our committee. i want to express similar sentiments as dr. burtless and others express. i strongly support all the above energy policies. in our country we are sadly lacking a real energy policy that allows us to utilize the natural resources we have in this country. we have to use all the resources we have, including wind and solar. those technologies have not advanced to the level they need to. what is at heart here is the question of this solyndra long, the taxpayer money that has been lost. how did we get to this point? one of the big issues i struggled with and others is when we get to this question of
subordination, as the loan was restructured, we go back and look at the law. this is the law of the united states, and it seems clear that those of us that have worked at the law, you cannot subrogate the taxpayer. you cannot put the taxpayer in the back of the line when you come to this decision of whether or not you are going to restructure. this is the actual restructuring that we got from your agency. this is the document that initiated the restructuring of the loan, including the subordination of the taxpayer. is this your signature on this page? did you sign off on this document? this is noted as item tapped 59. this deals with the restructuring of the loan guarantee to solyndra, including the restructuring. did you sign off on this? >> yes, i did.
that is my signature. >> so clearly, when you go back and look at the lock yourself -- did you look at the law yourself before you sign off on this document? this is not 50 pages. it is not even a paragraph. you looked at this one paragraph and even though it says the obligation shall be subject to the condition that the obligation is not the board that to other financing. you can tell me read this and you can still determined that it is ok for you to subordinate the facts here, even though the law says it is not? >> we did not subordinate the taxpayer under the terms of the original loan and we followed the law. >> at the time of the original -- >> that is a yes or no question. yes or no, mr. secretary. does the taxpayer have first
dibs or is some other company going to get first dibs on the first $75 million after restructuring? >> after restructuring, no. >> let's go back to your legal counsel. your legal counsel did look at this. i will go to page 5 of the legal opinion. it says this reading of the provision is reinforced by the use of the word is. beyond your department's attorneys. we discussed this in a previous hearing in our committee. i would hope to have seen this. gary byrne over at the treasury said the statue rests with the department of justice, the authority to accept the compromise. they recommended that you go to the department justice. did you do that?
>> we did not. >> what we do not go to the department of justice? this is the obama administration, the treasury department saying you ought to go to the department of justice, but because we don't think it is legal to put the taxpayer at the back of a line on a $535 million loan. why did you not at least do that due diligence? >> within the boundaries of the original loan, if you are acting within those original agreements, he need not go to the justice department. >> i guess that is your opinion. i think his go wrong and it is going to come out that you did violate the law in that regard. it is a shame for the taxpayer. was anyone at the white house involved in the decision to restructure the loan? did you get any pressure? we have e-mail showing there was pressure coming from the white house. one of the reasons we are still trying to get documents from the
white house, we have not been able to get them. who in one house was talking to you about restructuring the loan? >> to the best of my knowledge, no knowledge of anyone saying you need to restructure this loan. >> we are still going to try to get to the bottom of the loss of $535 million. i have seen a lot of e-mails from within the administration about policies. the washington post had a front- page story talk about e-mails from within the department of energy saying they are not concerned about the layoffs, they are concerned about the timing, the politics. wait until after the election. this is disgusting. you testified under oath you knew nothing about it. it happen at your agency. i hope you will go back in your agency and have some heads roll.
people need to be held accountable. decisions were being made above year and below you and hopefully maybe you were not making those, but it sure is strange that they were being made all are around you. i hope that someone will be held accountable. $535 million in taxpayer money was lost. i see a lot of e-mails in the administration concerned about the politics. that is what stinks' the most about this. >> you still don't know who at the white house, and you had no interest in finding out -- in your department, you don't know who in your department was involved with this, and you have no interest in finding out? >> no, we do have interest in finding out. >> when are you going to do it? >> certainly are general counsel's office will look at
who was doing these things. >> the gentleman from virginia is recognized for five minutes. >> take a deep breath, it has been a long day. i am going in a slightly different direction. i will be getting back to the subordination section. the same question was a slightly different legal basis for it. the language of that is, if the borrower will default on an obligation, the secretary shall notify the attorney general of the default. december 13, 2010 letter to solyndra from mr. silver, who was the head of the program. that is not in your book, mr. chairman. may that also be admitted to the record by unanimous consent? if we could get a copy -- it is a letter from mr. silver who
testified previously. in that letter he notices them that they are in default. this is december 13, 2010. >> the document as part of the record. >> he notes that they are in the fall and then goes through the reasoning why it is in the fall and says the department is not going to waive any of its rights under the contract. further i would point you to what is document 67, a memorandum from susan richardson of the rising the subordination and she indicates in paragraph 3 of the fall relating to financial requirement has occurred under the loan agreements. when that default occurred on
september 1, 9 $5 million remains to be advanced, and further, in an e-mail from tab 59 in february, silver further enologist there was a default in december by solyndra. that being said, mr. secretary, did your office in compliance with the coat, the section that requires if a borrower defaults, the secretary shall notify the attorney general of the default. did you do that? >> i would have to look back at this code of the justice department. this particular letter is about -- >> i am is asking you if in december did you notify the attorney general as required by the code? i am not asking for your interpretation of the letters. i want to know if you notified
the attorney general in accordance with the law. >> i will get back to you on that. could the bottom line is coming your people said it was a default. on a default, you are supposed to notify the attorney general. i am is asking did you do it? >> i will get back to you on that. >> do you know what the value of the patents and intellectual property of solyndra are? do you know what those values are? >> no. >> do you believe that have value? >> they should have some value, yes. >> do you think it will be greater or less than $75 million? >> i could not have any way of knowing that. >> i would draw your attention to tab 68 in your book. we are now talking about -- you have that in front of you?
>> yes, i do. >> it appears there is something going on during the time they were beginning to discuss the subordination, and a lot of it is redacted. do you have any idea who that was from and who it was too? >> no, i don't. >> do you know while that information was redacted? >> no, i don't. >> can you find out for me why all that information was redacted? >> we can get that back to you. >> the were you aware there were numerous discussions about solyndra pose a default and the problems they were having, and subordination came up fairly early in december 2010. were you aware of that? >> i am now, but one cannot move forward until one understands the law.
>> but do you understand that solyndra was looking at bankruptcy at that point, and without some understanding there would be a new $75 billion, that would have had to file bankruptcy pretty quick? >> that is my understanding that had this cash flow issue and the needed funds to continue, and that is why one restructure's pierre >> i understand that. don't the record for plaque that there was already an understanding within the department of energy that there was going to be a subordination even before the lawyers had an opportunity to determine whether or not they could? >> we do not do anything until -- is it okay to look at things in parallel? yes. before our lawyers determine whether it was -- >> do you understand that based on the documents that have been provided, it is pretty clear from the record that solyndra
would have had to have filed bankruptcy, that the investors were not willing to put the $75 million in unless the zero eat subordinated, and therefore when writing a legal memorandum, everyone in your department knew that unless they could figure out a way to subordinate, solyndra was going down. is that true? >> no, that is not correct. our council office has a responsibility to detect the deport -- protect the department of energy and that always come first. >> i just question why, and i go back to some of the other questions, why you did not get opinions when you had omb and treasury saying they did not think it was legal. why do not go to justice? were you afraid of getting an answer you did not like? >> the gentleman's time has expired.
>> we are required to go to justice because if there was a revision of the loan that meant we are not going to get paid back as much, we went to justice. we did go to outside counsel and saw other opinion. as noted earlier, there was a previous general counsel in the department of energy who also concurred with that decision. >> because i have not seen it, i have only seen the draft. if we could give that outside counsel's opinion, i would greatly appreciated. >> is it possible to get that today? >> i don't know about today. >> we have an opinion of the previous general counsel of the department of energy. >> i am asking for what you had at the time the decision was
made. >> we can certainly make those records available. >> the gentleman from kansas is recognized for five minutes. >> thank you for being with us this morning. you have been asked a couple of times if there is anyone who want to apologize. we can only get you to say unfortunate and regrettable. you have talked about some of the changes you have made to strengthen that oversight, and i appreciate that. when the loan was originally applied for under section 7 cino 3 -- 1703. then it changed to a section 1705 program.
did you approve that change? >> this as an action of the loan program. >> you were not involved in that process? >> no. >> the difference in those two programs is that 1703, the company has again in the game and has an incentive to be successful. 1705 is very different, is that correct? >> no, that is not correct. the company had a billion dollars of skin in the game. >> the credit subsidy does not get paid by the company. the american taxpayer provides the credit subsidy. >> in addition to that, there is an amendment of 20% additional that the equity people would have to put in. >> this legislation -- the
header reason they wanted the credit subsidies paid by the company. their vote -- the reason the private entities were designed to be the ones that pay the credit subsidy. there was a change of risk, would you agree? >> the 1705 bill was passed because they knowledge that many of the renewable companies would not be able to afford the credit subsidy and therefore tax dollars would be used to pay for the credit. >> of these were such bad investments that the company could not even afford the minimal amount to pay the credit subsidy. do you know what the credit subsidy was under the 1705 program? we are talking about $50 million.
the company could not afford to pay it. >> the credit subsidies corps and the credit subsidy as appropriated by congress -- >> the company could not afford to pay it so the government stepped in to take care of that $40 million. >> that is what happened. >> in light of the bankruptcy, has doe changed the calculation of that credit subsidies for? >> of course. >> what is it now? >> it is presumably quite high. we constantly reevaluate loans as the marketplace changes. we are constantly upgrading what the risk is. >> what is the change? >> i would guess probably in the 80's.
that is because when you change it, you know that the company is now in deep financial trouble, and that reflects the risk to the taxpayer. >> have you changed the score of the other loans in the portfolio to reflect the increased risk? cracks in some cases it the christie's -- in some cases it decreases. a loan to ford motor company, that credit subsidies court is greatly decreased because we feel that ford is ongoing, stable company and the loan did what it was supposed to do. >> just to point out since the secretary puts $10 billion on the table, nowhere in the law, no where in the definitions does it say that that program is to subsidize the loss of principal. the gentleman from kansas is
absolutely correct. it is designed for subsidized interest rates, but it is not designed to cover the loss of principal. so your opening statement, mr. secretary, is incorrect in asserting that it is. >> i want to talk about that $10 billion number. that is for the entire program, not just for section 1705. in your opening statement, you said there is $10 billion to cover potential losses. mr. barton and i both agree that is not what that $10 billion is designed for. even the $10 billion -- >> it was designed to cover the losses in the loans -- my understanding of what the credit
subsidy and what the appropriate funds or fort was for in the event that we invest in these companies, some of them might have trouble paying back their loans. >> the number was $2.5 billion. >> the $10 billion, as i said before, was 1705 plus a little bit of 1703. >> we have mandates -- when you provide your credit subsidies for, what is the assumption about the continuation of those other subsidies? when you are calculating the risk, do you assume that these other enormous subsidies will be renewed, or do you assume that they will expire at the law directs that they expire? but the major goal is the financial health of the company and the assets of the company, and most of the loans or on projects, whether it is new
fabrication plant or a project that involves solar or wind or something like that. the credit subsidies gore goes to the fact -- the credit subsidies score goes to the event that something happens, how much the government gets paid back. it reflects that uncertainty and the evaluation of the omb is the probability of default on the loan. >> i did not get an answer to the question. >> we are going to do a second round. it appears to be mostly republicans. would you like a break of about 59 cents for any reason, or would you like us to continue on project of about 15 minutes for any reason. >> i will take a break. >> we will reconvene at 1:15. >> thank you.
[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> in a few moments, house debate on a balanced budget amendment to the constitution. in an hour-and-a-half, the detroit mayor on this city's financial situation. then we will reach here energy secretary steven chu's testimony about loan guarantees to the now bankrupt solar panel maker, solyndra. and washington journal tomorrow morning, the focus on the work of the joint deficit reduction committee. washington journal is live on c- span every day at 7:00 a.m. eastern. >> there is a story that i was told that when obama was given
the first budget endorsement six or 7000 earmarked in it. his first instinct was to veto that budget. he was told by his lobbyists on capitol hill that there is no way you can do that. you cannot cut ties with the democrats. i think that had he vetoed that, he would have been the tea party. he would have signaled his fundamental desire to change the system and to change the way washington works. he could have continued to rally the reform movement that has broken out all over the world because of his frustration with the current way that democracy does not function. lawrence lessig, on money and the way it influences washington, sunday on "q&a". >> book tv brings you the 28 annual miami book fair international. join in with your calls, e-
mails, and tweets, live this weekend on c-span2. also this week in, pat buchanan and ralph nader on the end of america. >> nationalism, tribalism, religious fundamentalism, are for more powerful than ideology. we are not immune in this country from these forces, and when the melting pot has been thrown out and you are preaching multiculturalism, what holds us together? from new york city, the 62nd annual national book awards. find the complete schedule online at booktv.org. >> up next, a 90 minute portion of today's debate.
>> we want to reduce federal spending and reduce the federal deficit. balanced was during a clinton administration, when republicans in congress passed the first balanced budget in over 25 years. meanwhile the federal debt has climbed from less than $400 billion in 1970 to over $15 trillion today. the speaker pro tempore: the gentleman will suspend. i'd ask members on the minority side, in the rear of the chamber, to take their conversations off the floor. the gentleman from texas is recognized. mr. smith: mr. speaker, president obama has set the wrong kind of new record.
the national debt has increased faster under his administration than under any other president in history. america cannot continue to run huge federal budget deficits. financing federal overspending through continued borrowing threatens to drown americans in high taxes and heavy debt. and it puts a drag on the economy. the federal government now borrows 42 cents for every $1 it pends. no family, no community, no -- spends. no family, no community, no business, no country can sustain that kind of excessive spending. that is the road to insolvency. unfortunately this kind of bad behavior has gone unchecked for so long that it has become the norm. the federal government has been on a decades' long shopping spree, racking up the bills and leaving them for future generations. we need a constitutional mandate to force both the president and
congress to adopt annual budgets that spend no more than the government takes in. only a balanced budget constitutional amendment will save us from unending federal deficits. just as both parties have joint responsibility for the deficit, we must jointly take responsibility for controlling the deficit by passing the balanced budget amendment. we came very close to passing this balanced budget amendment in 1995, falling just one vote short in the senate of the required 2/3 majority. in that congress the amendment was supported by congressman hoyer, now minority whip, congressman clyburn, now assistant democratic leader, and senator joseph biden, now vice president. as then senator biden stated in support of the balanced budget amendment, quote, in recent decades we have faced the problem that we do not seem to be able to solve. we cannot balance our budget or more correctly we will not, the
decision to encumber future generations with financial obligations is one that can rightly be considered among the fundamental choices addressed in the constitution, end quote. congress is way overdue to pass a balanced budget amendment and the american people want it. polls show that 74% are in favor of a balanced budget amendment. it took less than a generation for us to get into this mess, we need a fiscal fix that will now last for generations. if we want to make lasting cuts to federal spending, a constitutional amendment is the only solution. it is our last line of defense against congress' unending desire to overspend and overtax. thomas jefferson believed that, quote, the public debt is the greatest of dangers to be feared. jefferson wished, quote, it were possible to obtain a single amendment to our constitution, taking from the federal government the power of
borrowing, end quote. it is time that we listened to thomas jefferson and pass the constitutional amendment to end the federal government's continuous deficit spending. we must solve our debt crisis to save the future. i want to thank mr. goodlatte, the gentleman from virginia, for introducing the version of the balanced budget amendment we are considering today, and for his tireless work in support of the amendment. since the 1930's, dozens of proposals offered by both democrats and republicans have called for constitutional amendments to address federal budget deficits. we have the opportunity today to take the first step toward making a balanced budget a reality by passing this legislation. the american people have not given congress a blank check. let's demonstrate to the american people that congress can be fiscally responsible and get our economic house in order. borrowing 42 cents for every $1 the government spending and
setting a new deficit record is not the road to prosperity. let's put our country first and pass this amendment. mr. speaker, i'll reserve the balance of my time. the speaker pro tempore: the gentleman from texas reserves his time. the gentleman from michigan is recognized. . mr. conyers: thank you, mr. speaker. ladies and gentlemen, this balanced budget constitutional amendment is one that surprises me and very little surprises me any more. but for us to be seriously on this day, in this time considering an amendment to the constitution of the united states, it would destroy jobs, it will drastically cut social security and medicare gives members of the federal
judiciary the right to raise taxes and makes spending decisions for us is relatively shocking to me. and i am very much opposed to it. i wanted to engage my dear friend, the chairman of the committee the exchange of views on this. let's start off the discussion with this reality. this is not 1995. and that's why so many people that supported the amendment then have changed their minds now, and they will explain this as they go along. and i would like now, mr. speaker, to yield to the former chairman of the constitution subcommittee, jerry nadler, for as much time as he may consume.
the speaker pro tempore: the gentleman from new york is recognized for as much time as he may consume. mr. nadler: i thank the gentleman for yielding, mr. speaker. i rise in opposition to this miscombided attempt to amend our -- misguided attempt to amend our constitution. it's bad economic policy and bad constitutional policy. let's start with the basics. when balancing your budget and paying down your debt is important and we did that under president clinton, a balanced budget every year, regardless of the circumstances, even when facing economic crisis, a natural disaster or terrorist threat is economically did you say. we will shackle future generations to one economic policy preference that does not work at all times and in all situations. in general, the economists tell us in good times you should have a balanced budget and pay down the debt. in bad times when the rescission increases demand on government and tax revenues fall or an emergency, you need
to be able to run a deficit. the nonpartisan economists at macroeconomicses tell us if this were in effect next year it would eliminate 15 million jobs and double the unemployment rate. this would shackle future generations in such situations. one thing we can be sure of, this amendment will devastate the economy, destroy medicaid, medicare and social security, cripple our government's ability to deal with national emergencies to maintain our vital infrastructure ordeal with new challenges as they emerge. -- or deal with new challenges as they emerge. this doesn't allow us to balance the budget the way states or families or businesses do. they are required no more to spend this year's income. families borrow money. if they were told you must pay cash, you want to buy a house, pay cash, you want to buy a car, pay cash, they wouldn't
have the house, the car, their spending limit will be much lower. statesboro money. states have balanced budget amendments generally but those amendments refer to their operating budgets. they borrow money for their capital budgets to build bridges and roads and high waist -- highways. the budget of the united states doesn't make such distinction. this balanced budget amendment says you can never borrow money. you cannot borrow money to build highways, to make investments, to deal with the economy in a recession. it doesn't make sense. similarly, we collect payroll taxes to pay for social security benefits. we collect gasoline taxes to pay for transportation infrastructure. and we carry over unexpended funds in those trust funds from prior years. because they were paid in prior years those revenues would not count. only the expenditures. if you paid $100 in social security taxes in 1960, and drew $100 of benefits in 2011,
the deficit would be $100. no matter how much money we have put away for a rainy day we would still be limited to spending no more than that tax revenues. no one in this room balances their budget that way. what happens when you retire and your income drops? do you not touch your savings because it didn't come during that year? of course not. you are not running a deficit when your expenses that year's income plus savings. i know we have a lot of millionaires here but did anyone pay cash for their home? but this amendment enshrines craze rey bookkeeping and distorted policies into our constitution. so all the chatter about states and families balancing their budget is true, it is irrelevant to what this amendment says. because it's a constitutional amendment it will give federal judges, the life tenure, the power to cut spending and raise taxes. anyone can bring a lawsuit if
the budget doesn't balance, if the estimated receipts in his opinion didn't match the estimated tax revenues. and a judge would have to decide whose revenue and expenditure estimates were correct. and if they were -- if they didn't match in the judge's opinion, the judge would have to decide to increase taxes or to cut expenditures and which expenditures to cut, an unelected judge. how is that possible? it's possible bought of the constitutional amendment. the courts would have the power to enforce it just as the way they do with the rest of the constitution. all revenue measures must originate here. thaws because we are closest to the people, the people's house. this would go as far away from that wide decision as you possibly can by giving that power ultimately to the only part of government that is not elected by the people and that is not accountable at the ballot box, the judiciary.
the courts could also order reduction in spending. they could slash military spending or social security or eliminate disaster relief. the voters, the congress would be powerless to stop such decisions. is this really someone's idea of constitutional conservatism? this is not limited to a requirement that we balance a budget. it imposes a 3/5 supermajority requirement to raise the debt ceiling. while we considered that in 1995, it never occurred to anyone that any member of congress, much less a majority, would allow the united states to default on its debt. it wasn't just considered crazy, it was considered impossible. today, unfortunately, we live in a different way. this time for the first time in history we nearly defaulted on the full faith and credit of the united states. and for the first time in our history saw our credit rating downgraded. and a 3/5 would make it much more difficult. is this balanced budget amendment necesry